16th October 2018
Erika Mesmer, Client Relationship Manager
Unilever, major consumer goods company, was formed in 1929 by the merger of the Dutch Margarine Unie and the British Lever Brothers. Since then, the company has kept it dual headquarters in Rotterdam and London. Following the hostile takeover bid by its smaller competitor Kraft, which Unilever was able to turn down in spring 2017, the company decided to simplify its company structure, end its dual listing and move to a single headquarter in the Netherlands.
UK institutional investors however were not amused by Unilever’s plan. As most investors, they have a home bias and invest part of their assets in UK equities. Unilever, as all companies active in the consumer goods sector, benefits from regular and predictable revenues and offers investors the participation in a solid, defensive quality company. It therefore is a company investors like to be part of their investment universe and hold in their portfolio.
The plans of Unilever, to move to a one single domicile, would see the company delisted from the London Stock Exchange, moved out of UK indices, like the FTSE100. This would force investors to sell their investments in it, as it is removed from their investment universe. This, maybe together with the fact that the producer of their bellowed Marmite would not be called British anymore, brought out the fighting spirit of many investors. Opposition grew to a point where it became clear that the company’s plans would not pass the necessary vote at an extraordinary shareholder meeting later this month. Unilever therefore announced last Friday that it cancelled its plans for a single domicile.