Unilever (LON:ULVR) is dropping its plans to scrap its dual-headed structure and create a single holding company in the Netherlands, the Anglo-Dutch consumer goods giant has said. The move follows major opposition from UK shareholders to the plans, which would have seen the company lose its spot in the benchmark FTSE 100 index.
Unilever’s share price has slipped marginally into the red in London this morning, and as of 08:37 BST, was 0.29 percent down at 4,066.00 points. The decline is largely in line with the broader market, with the Footsie currently standing 0.33 percent lower at 7,393.67 points.
Unilever scraps simplification plans
Unilever announced in a statement this morning that its board had decided to withdraw its proposal to simplify the group’s dual-headed structure. While the proposal was part of the company’s plans to unlock value for shareholders in the wake of Kraft-Heinz’s failed bid, it resulted in a massive investor rebellion. The company said that it had “had an extensive period of engagement with shareholders,” and while it had received support for the principle behind simplification, it recognised that the proposal “had not received support from a significant group of shareholders”.
“The Board will now consider its next steps and will continue to engage with our shareholders,” Unilever’s chairman Marijn Dekkers commented in the statement.
Good news for UK plc
Sky News City editor Mark Kleinman described the decision as a “humiliating climbdown for the board of Unilever but in many respects it’s good news for UK plc”.
The Financial Times meanwhile quoted Berenberg analyst James Targett as saying in a note that this was “clearly a win for UK plc but frustrating for Unilever”. He added that shares in the consumer goods giant could benefit in the short term from ending uncertainty around the vote and removing the overhang from forced selling by UK shareholders had Unilever exited the FTSE.