Victory for investors as Unilever backs down on plans to leave UK

5 October 2018

Following widespread opposition, Unilever has scrapped its plan to delist from the UK market. 

Unilever has scrapped its plan to delist from the UK market, following outcry from investors.

The company is currently dual-listed on both the UK and Dutch market. However, earlier this year it announced its intention to delist from the UK, remaining listed on only the Dutch index.

However, following widespread opposition from UK shareholders, who ultimately would have had to approve the plan, Unilever has shelved it.

In a statement the company said: "We recognise that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw."

As Rebecca O’Keefe, head of Investment at interactive investor, notes: "The backlash the company faced from institutional investors meant that the writing was on the wall and it was unlikely that Unilever could have secured the 75% it needed to pass."

A wide range of UK investment funds had come out opposing the plan, including Legal & General Investment Management, Royal London Asset Management, Lindsell Train and Aviva Investors. Delisting was generally seen as bad for UK shareholders, particularly passive investors, as they would have been forced sellers.

Moreover, there were concerns that a delisting could impact the amount of dividends UK holders of Unilever receive. Job Curtis, manager of the City of London investment trust, pointed out that foreign investors pay a 15% withholding tax in the Netherlands. He had planned to vote against the de-listing.

Speaking ahead of today’s announcement Curtis said: "Effectively it’s like a takeover without any premium. You’re basically forced to sell your stock at a time not of your choosing without any premium."

Unilever had also faced backlash from retail investors as the majority would have been barred from voting on the move due to rules blocking votes from shareholders using nominee accounts. Going ahead with the vote on this basis, says O’Keefe, would have likely alienated retail investors.

But the fight may not be over. Unilever has only announced its intention to withdraw the proposal for now due to lack of support. However, as the company’s chairman noted in a statement to board, he still believed the overhaul was in the "best long-term interests of shareholders," and he would now "consider its next steps."

This article was first published on our sister website Money Observer.

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