Unilever’s Board raises the white flag

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In recent weeks, a number of Unilever’s shareholders have spoken out against the proposed unification of Unilever’s dual structure and the relocation of its legal headquarters to Rotterdam. Prominent fund management groups such as Columbia Threadneedle, Aviva and Schroders have all announced that they would be voting against the proposals and some commentators have speculated that around 16% of shareholders were likely to oppose the move.

In a brief statement on 5 October, the Board of Unilever announced that it was withdrawing the proposal to unify the company’s dual-headed legal structure. While the Board reiterated its view that simplification would be the best route forward for the company in the long term, it recognised that the proposal had not received support from a significant group of shareholders.

Although the plan might still have scraped past the 75% approval threshold required to pass the relevant shareholder resolutions on 25 and 26 October, a significant minority ‘no’ vote would have been a highly embarrassing public rebuke for management.

From an underlying perspective, little has changed in the business during this period of focus on the group’s corporate structure. Management has listened to its shareholder base and acted accordingly. We continue to regard Unilever as a well-managed, high quality global consumer goods business which merits consideration for many investor portfolios and look forward to a renewed focus on the business fundamentals.

5 October 2018