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Unilever Climbdown Illustrates 'Power' Of Institutional Investors: Analyst

By Steve Wynne-Jones
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Unilever Climbdown Illustrates 'Power' Of Institutional Investors: Analyst

Unilever's decision to scrap its plans to move its headquarters from London is "an example of the power institutional investors can wield when they act in concert with one another", a leading analyst has said.

AJ Bell investment director Russ Mould made the assessment following the decision by the group to maintain its UK base, amidst speculation that as many as 12% of shareholders were opposed to the planned move to Rotterdam.

In a statement on its website this morning, Unilever said that it recognised 'that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw.

Question Of Credibility

Mould noted that Unilever's climbdown "brings into the question the credibility of Unilever’s insistence that the vast majority of shareholders were ‘fully supportive’ of its proposals ahead of the vote deadline in the UK and the Netherlands later this month.

“Abandoning its dual UK-Dutch stock market listing and moving its HQ to Rotterdam would have made Unilever, one of the London market’s leading lights, ineligible for the FTSE and many institutions complained they would have been forced sellers of the shares."

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Board Pressure

Mould suggested that the saga appears to have been "badly mis-managed" and chief executive Paul Polman and his board are "likely to come under severe scrutiny" as a result of the climbdown.

“In principle the rationale behind Unilever’s proposals made sense, simplifying the share structure would, for example, have made it easier to use equity in takeover deals," Mould added. "However, whether the current management will be able to push through an alternative is open to question.

“Uprooting to Rotterdam also had clear political sensitivities given it was timed to take place before the UK’s looming exit from the EU, coincidental or not. The news will therefore be greeted with relief in Number 10 and some frustration in the Netherlands which had been looking to introduce tax changes to pave the way for Unilever’s move.”

© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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