Unilever plc (LON:ULVR) plans to change its current structure as two separately listed UK and Dutch entities to become a single holding company in a bid to simplify the business.
The consumer goods giant, whose brands include Marmite, PG Tips and Dove, will become a single holding company through a UK scheme of arrangement and a Dutch legal merger. In March, Unilever said a new holding company, New Unilever NV, would be incorporated in the Netherlands and listed in London, Amsterdam and, in the form of American depositary shares, in New York.
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The group published its prospectus for New Unilever NV on Tuesday along with an outline of its simplification plan.
Chairman Marijn Dekkers said the decision to base the new holding company in the Netherlands reflected the fact that the Dutch business was 22% larger than the UK arm and more shares trade in the Netherlands than the UK.
One share in the capital of New Unilever NV will be issued for each share in the Dutch entity and for each share in the UK entity. This means shareholders will receive shares in the capital of New Unilever NV that represent an equivalent economic interest. Shareholders will continue to receive dividends in the same currency.
"In summary, we believe our proposal will modernise and simplify our structure, create value and drive performance for the long term and position Unilever for future success," said Dekkers.
The proposed simplification is subject to shareholder and regulatory approvals.
Simplification adds value
The plans for the new structure follow a review of the business, which was launched last year after rebuffing a US$143bn takeover offer from US firm Kraft Heinz Co (NASDAQ:KHC).
The simplification included creating three divisions with Beauty & Personal Care and Home Care being headquartered in London and Foods & Refreshment being based in Rotterdam.
In a note to clients, assessing the key discussion points on Unilever's impending legal review, analysts at UBS concluded: “Overall, we consider the proposed changes as value-enhancing for Unilever.”
The Swiss bank’s analysts said: “In summary, we think (1) Unilever has made a convincing case for why NV and PLC should unify; (2) the proposed changes will strengthen Unilever's corporate governance, addressing a key concern by some market participants; and (3) Unilever has taken steps to address other issues (like dividend withholding taxes), but index exclusion could negatively impact a small (yet unquantified) percentage of PLC shareholders.”
In late afternoon trading, Unilever shares in London were trading 0.06% higher at 4,274p.
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