Serious objections from some of the largest investors have forced Unilever to cancel its announced plan to shift the headquarters of the company from the United Kingdom.
The planned change “has not received support from a significant group of shareholders”, said the consumer goods multinational on Friday.
The company had announced in March last this year that its effort to create a simpler corporate structure made it necessary to have only one corporate headquarters at the company had decided to retain the one in Rotterdam and shit the work done in the United Kingdom there. Unilever deals in a large number of products and brands ranging from Dove, Lipton to Ben & Jerry’s.
The earlier announcement of shifting of the headquarters from the UK by Unilever which is amongst the largest companies in the country was viewed as a hit to the UK in the wake of its preparation for the imposition of Brexit.
The dual headquarter system at London and Rotterdam has been a part of Unilever’s corporate structure for a number of decades.
The argument behind its decision of having just one corporate headquarters as presented by the company earlier was that the move would give the company greater flexibility for the purchasing or selling of brands because it would then have had a much simpler structure by consolidating itself in the Dutch city. However the company would continue to be listed in the stock exchanges in New York, Amsterdam and London.
If the company had moved out of the UK and got settled with its headquarters in Rotterdam, it would have had to be delisted from the FTSE at London because then the company would have been designated as a Dutch company. Large investors and funds that have significant investments in the shares of Unilever and which also are important for the makeup of the benchmark index were worried about the need to dump shares of Unilever of the company had gone ahead with its plan.
After the latest announcement by Unilever, its shares dropped by 0,7 per cent in London.
“We expect a mixed reaction today: some [UK] shareholders will view the withdrawal positively as the stock will maintain its inclusion in the FTSE 100 index, but others might be disappointed,” noted analysts at UBS.
To enable Unilever to make the move, the company would have required approval from at least 75 per cent of the UK shareholders who have voting rights. Such a meeting was set to be happened later this month.
For Unilever managers including CEO Paul Polman, this decision to scrap the decision is a blow. The move to review of the company structure was initiated by Polman last year after the company managed to bypass an acquisition attempt by Kraft Heinz.
There are over 161,000 employees in the company that owns more than 400 brands. According to the claims of the company, it has a consumer base of over 2.5 billion people.
(Adapted from Money.CNN.com)