Unilever to Unify Legal Structure

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Unilever to Unify Legal Structure

Unilever to Unify Legal Structure
June 12
09:15 2020
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Unilever has announced plans to unify its group legal structure under a single parent company – Unilever PLC – creating a simpler company with greater strategic flexibility that is better positioned for future success. Unilever has been owned through two separately listed companies, a Dutch NV and a UK PLC, since its formation in 1930. During this time, Unilever NV and Unilever PLC, together with their group companies, have operated as nearly as practicable as a single economic entity. Unilever employs around 2,500 people in The Netherlands and 6,000 people in the UK.

After a comprehensive review over the last 18 months, the Unilever board continues to believe that moving from the current dual-headed legal structure to a single parent company will bring significant benefits by:

  • Increasing Unilever’s strategic flexibility for portfolio evolution, including through equity-based acquisitions or demergers. Such flexibility is even more important as we anticipate the increasingly dynamic business environment that the Covid-19 pandemic will create.
  • Removing complexity and further strengthening Unilever’s corporate governance, creating for the first time an equal voting basis per share for all shareholders. Upon completion, there would be one market capitalisation, one class of shares and one global pool of liquidity, whilst maintaining the Group’s listings on the Amsterdam, London and New York stock exchanges.

Unilever remains committed to its strategy of long-term growth across all three divisions and last year began a full evaluation of its current categories and brands, with a view to accelerating the pace of portfolio change. This review has underlined how a simpler legal structure would give Unilever greater strategic flexibility to grow shareholder value, providing a catalyst for accelerated portfolio evolution and greater organisational autonomy.

The ongoing strategic review of Unilever’s tea business has further demonstrated that the dual-headed legal structure can create disadvantages for the group. For example, a demerger of the tea business is one potential outcome of the review and, as was previously the case with the disposal of the company’s Spreads business, this would be significantly more challenging under the current legal structure than under a single parent structure.

It is also clear that the Covid-19 pandemic will create a business environment in which having as much flexibility and responsiveness as possible will be critically important.

The board considers unification under Unilever PLC as the best practical option to achieve this goal. This will be implemented through a cross-border merger between Unilever PLC and Unilever NV. Unilever NV shareholders will receive one new Unilever PLC share in exchange for each Unilever NV share held.

The proposed changes do not impact the underlying economic interests of any shareholder and, for the first time, investors will share exactly the same legal, ownership, dividend, governance and capital distribution rights in a single parent company. The board expects Unilever to retain indexation in both the AEX and the FTSE UK Index Series.

Following the move to a single parent legal structure, Unilever’s strong presence in both The Netherlands and the United Kingdom will remain unchanged. There will be no change to the operations, locations, activities or staffing levels in either the United Kingdom or The Netherlands as a result of unification.

There will also be no changes to the manufacture and supply of Unilever products in The Netherlands and the United Kingdom as a result of unification.

Unilever is very proud of its Anglo-Dutch heritage and has significantly strengthened its presence in The Netherlands in recent years. Unilever has engaged with the Dutch government ahead of this announcement and has confirmed that its commitment to the Netherlands will not change as a result of this proposal. For example, the headquarters of Unilever’s Foods & Refreshment Division, which was created in 2018, and is around 40% of Unilever by turnover, will continue to be based in Rotterdam, along with the €85 million Research & Development centre in Wageningen, which opened in 2019. The Dutch government has welcomed our engagement and we have agreed that this will continue.

Agri-foods is an important sector in The Netherlands. With the flexibility that unification provides, the Dutch government has also asked for reassurance that if Unilever should ever choose to list the Foods & Refreshment Division as an independent company, it would be incorporated and listed in The Netherlands. The Netherlands is an attractive headquarters location for business and provided it continues to be as such, Unilever is comfortable to make these commitments given the division’s already strong Dutch presence.

There will be no significant changes to Unilever’s footprint in the United Kingdom as a result of unification, in either jobs or investment. The Home Care and Beauty & Personal Care Divisions will continue to be headquartered in the United Kingdom, as they are currently.

Nils Andersen, Chairman of Unilever, comments: “Unilever’s board believes that unifying the company’s legal structure will create greater strategic flexibility, remove complexity and further improve governance. We remain committed to The Netherlands and the UK and there will be no change to Unilever’s footprint in either country as a result of the proposed change to Unilever’s legal parent structure. We are confident that unification will help Unilever deliver its vision of driving superior long-term performance through its multiple stakeholder business model.”

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