NETHERLANDS – Unilever has announced plans to unify the group’s legal structure under a single parent company, Unilever PLC, in a move that will end the dual parent holding company structure as the company seeks to remove complexities and further strengthen its corporate governance.
The consumer goods giant has been owned through two separately listed companies, a Dutch NV (operating as Unilever NV) and a UK PLC (operating as Unilever PLC), since its formation in 1930.
Unilever, which is listed on the Amsterdam, London and New York stock exchanges, said that despite operating its entities as nearly as practicable as a single economic entity, the has experienced complexities in driving strategic flexibility, portfolio evolution and corporate governance.
In efforts to better position the company for future success, Unilever last year began a full evaluation of its current categories and brands, and strategic business review with a view to accelerating the pace of portfolio change.
The company noted that the review has underlined how a simpler legal structure would give Unilever greater strategic flexibility to grow shareholder value, providing a catalyst for accelerated portfolio evolution and greater organisational autonomy.
“The ongoing strategic review of Unilever’s tea business has further demonstrated that the dual-headed legal structure can create disadvantages for the Group,” Unilever said in statement citing significant hurldes during the 2017 disposal of the company’s Spreads business and its ongoing review of the tea business.
Unilever’s Board has therefore unveiled plans of unifying its business under Unilever PLC as the best practical option to achieve this goal. The company said that this will be implemented through a cross-border merger between Unilever PLC and Unilever NV.
As part of the merger, the group noted that the changes will not impact the underlying economic interests of any shareholder and, for the first time, investors will share exactly the same legal, ownership, dividend, governance and capital distribution rights in a single parent company.
Unilever’s board also expects the company to retain indexation in both the AEX and the FTSE UK Index Series whilst maintaining the group’s listings on the Amsterdam, London and New York stock exchanges.
Despite the move to a single parent legal structure, Unilever’s strong presence in both The Netherlands and the United Kingdom will remain unchanged. “There will be no change to the operations, locations, activities or staffing levels in either the United Kingdom or The Netherlands as a result of unification,” the company noted.
Unilever added that there will also be no changes to the manufacture and supply of its products in The Netherlands and the United Kingdom as a result of unification. In addition, there will be no significant changes to Unilever’s footprint in the United Kingdom as a result of unification, in either jobs or investment and the company will retain its employment of around 2,500 people in The Netherlands and 6,000 people in the UK.
Notably, Unilever said that its Foods & Refreshment division will continue to be headquartered in Rotterdam, alongside the new €85 million R&D centre in Wageningen, whilst Beauty & Personal Care and Home Care will continue to be headquartered in London.
The company further unveiled that it will consolidate its procurement function in Europe by moving certain roles to its European supply chain HQ in Rotterdam.
With the announcement, the company moves closer to the end of its continuous review for that past two decades with some steps having been taken to reduce complexity.Most recently in October 2017 Unilever NV preference shares were successfully repurchased, and in June 2019 Unilever NV terminated its depositary receipt structure.
In October 2018, the Board withdrew a proposal to unify its corporate structure under a new Dutch holding company; although the group said that it received widespread support for the principle of unification.
Commenting on the new strategic direction, Nils Andersen, Chairman of Unilever, said: “Unilever’s Board believes that unifying the company’s legal structure will create greater strategic flexibility, remove complexity and further improve governance.
“We remain committed to The Netherlands and the UK and there will be no change to Unilever’s footprint in either country as a result of the proposed change to Unilever’s legal parent structure. We are confident that unification will help Unilever deliver its vision of driving superior long-term performance through its multiple stakeholder business model.”