Unilever to lose London listing?

[absolutezero]

Apparently, tomorrow, Unilever are to make a decision on dropping their dual listed Anglo-Dutch listing and legal system and settling on either a UK or Dutch only listing.
The smart money (and very strong rumour) is the UK listing will be dropped. Unilever have been after getting rid of the dual structure for some time now.

https://www.retaildetail.eu/en/news/gen ... -rotterdam

Nothing to do with Brexit and but simply to do with the Dutch scrapping dividend tax and cutting corporation tax making the Netherlands more open for business than the UK.

This would be an irritation. I hold Unilever and I have an aversion to non LSE listed shares.

[absolutezero]

Further news:
https://news.sky.com/story/boards-of-do ... q-11289411

Dutch corporate laws which allow Netherlands-incorporated companies to adopt ‎'poison pill' defences to thwart hostile takeovers have been a major factor in the year-long review, according to people close to the company.

Seems the Kraft bid last year is a deciding factor in possibly ditching the UK.

While Unilever will retain its listing in London, it has also been forced to explore the impact of its redomiciling on its inclusion in the FTSE-100 index, which is affected by the location of a company's main legal base.

Sources said that Unilever was confident it had found a way to retain its status in London's blue-chip share index.

May remove some of my headache.

[NeilW]

I'd be amazed if they dropped the London listing. It would result in wholesale dumping of the share by index funds.

[Lootman]

I'd be amazed if they dropped the London listing. It would result in wholesale dumping of the share by index funds.

But there would be buying of it as well by European index funds. The market cap would stay the same - it would just be 100% in one country rather than 50% in two.

[TUK020]

My understanding was that the dual legal structure with cross shareholding was a different issue from listing, and both of these are different from headquarters.
I had guessed that Unilever was heading towards single structure incorporated in Netherlands (thus allowing poison pills), listed on London SE (also in Netherlands), retain HQ in London (day to day business as usual)
Does anyone know if this is possible?

[Breelander]

My understanding was that the dual legal structure with cross shareholding was a different issue from listing, and both of these are different from headquarters.
I had guessed that Unilever was heading towards single structure incorporated in Netherlands (thus allowing poison pills), listed on London SE (also in Netherlands), retain HQ in London (day to day business as usual)
Does anyone know if this is possible?

According to the Sky News link cited earlier, that seems to be the plan - retaining a London listing (as Santander does).

While Unilever will retain its primary listing in London, as well as listings in the Netherlands and the US, it will no longer be eligible for inclusion in the FTSE-100 index because its domicile will be outside the UK.

Hope that's the case as it's one I hold.

[Lootman]

While Unilever will retain its primary listing in London, as well as listings in the Netherlands and the US, it will no longer be eligible for inclusion in the FTSE-100 index because its domicile will be outside the UK.

Hope that's the case as it's one I hold.

The US listing is via depository receipts, managed by Deutsche Bank I believe. So it's not really a separate listing but rather a packaging of shares already listed in Europe (not sure if they are the UK or Dutch listing).

I notice that sometimes there is more liquidity in the US ADRs of Unilever than the UK listing anyway.

[Breelander]

The US listing is via depository receipts... So it's not really a separate listing but rather a packaging of shares already listed in Europe...

True, that's the way the US requires it to be for any UK/EU shares listed there. The UK equivalent is a CDI (Crest Depository Instrument) but that's not the only way to retain a UK listing as the example of Santander shows. CDIs can be problematic to hold in an ISA (mine would not allow the Verizon CDI to be held after the Vodafone deal, for example). But it's different for Santander (and hopefully will be for Unilever).

Banco Santander has a standard listing of its ordinary shares on the London Stock Exchange...

https://www.santander.co.uk/uk/about-sa ... ouncements

[Gengulphus]

My understanding was that the dual legal structure with cross shareholding was a different issue from listing, and both of these are different from headquarters.
I had guessed that Unilever was heading towards single structure incorporated in Netherlands (thus allowing poison pills), listed on London SE (also in Netherlands), retain HQ in London (day to day business as usual)
Does anyone know if this is possible?

Something along roughly those lines is possible, as Royal Dutch Shell before its "re-unification" in 2005 had a 'dual listed company' structure similar to Unilever's current one, and the "re-unification" transformed it into a single company that (according to the 2016 (*) annual report, mostly on page 187):

* Is incorporated in England & Wales.

* Is headquartered in the Netherlands.

* Is listed in London.

* Has its shares traded in London and Amsterdam.

* Is tax-resident in the Netherlands and has a class of share (RDSA) that (as normal) pays its dividends under that country's tax regime.

* Also has a class of share (RDSB) that, under a special arrangement, pays dividends purely under the UK tax regime.

* Has American Depositary Shares (or "ADSs") listed and traded in New York, each representing 2 shares deposited with the Bank of New York (two different types of ADS exist, one for each of RDSA and RDSB shares).

Not exactly the same as the structure you suggest, which has the country of incorporation and the headquarters the other way around, but I'd be surprised if that difference made one structure possible and the other impossible!

(*) The 2017 annual report isn't out yet, though it must be close.

Gengulphus

[Steveam]

If, as reported in the Guardian, one of the main reasons for a move is the possibility of using a poison pill defence to any takeover approach then I’m really annoyed. It is up to me and other shareholders to make takeover decisions based on the arguments. It is not for the directors to make my company unsalable. I’m a capitalist and believe takeovers to be part of a necessary process of creative destruction.*

Best wishes,

Steve

* I do accept that some regulation is necessary but this is protecting the company at the expense of the shareholders.

[vrdiver]

I do accept that some regulation is necessary but this is protecting the company at the expense of the shareholders.

In general, yes, but where short term benefits (e.g. a premium on the share price) are used to persuade investors against staying with a long-term stable company, I'd like to see higher hurdles to takeovers. I've lost several good companies from my HYP to takeover activity and whilst the premium price paid is some compensation, I'd rather have kept the companies. The other objection is that takeover bids may occur after a company has stumbled and is on the road to recovery, meaning my expectation for self-healing and return to normal is wiped out for a "premium" on the price that leaves me with a crystalized loss.

Short term investors have a very different agenda to us long-term holders, and I'd prefer to see the regulations moved in our favour. If Unilever decides to move to a regulatory authority that gives me that advantage, it's fine by me.

[idpickering]

BUILDING THE UNILEVER OF THE FUTURE

Firstly, we are evolving our structure to be based on three Divisions:



· These Divisions - Beauty & Personal Care, Home Care, and Foods & Refreshment - will be more empowered, with greater responsibility for making long-term strategic choices and managing financial performance.

· All three divisions will continue to benefit from Unilever's global scale and route to market.

· The headquarters of the Beauty & Personal Care Division and the Home Care Division will be located in London.

· This secures nearly £1 billion per year of continued spend in the UK, including a significant commitment to R&D.

· The headquarters of the Foods & Refreshment Division will continue to be based in Rotterdam.



Secondly, we are proposing to simplify our corporate structure:



· Unilever intends to simplify from two legal entities, N.V. and PLC, into a single legal entity incorporated in the Netherlands. This reflects the fact that the shares in N.V. account for approximately 55% of the group's combined ordinary share capital 1 , and trade with greater liquidity than PLC shares.

· Unilever will continue to be listed in London, Amsterdam and New York.

My bold.

https://www.investegate.co.uk/unilever- ... 00077793H/

[Horsey]

Anyone have any info on the situation with Dutch witholding taxes?

I thought they were low (15%), but have heard rumours of changes (to 0%).

[StepOne]

Anyone have any info on the situation with Dutch witholding taxes?

I thought they were low (15%), but have heard rumours of changes (to 0%).

Unilever CEO on radio 4 just now saying Dutch withholding tax also zero. Anyway they will still be London listed so won't be an issue.

[vrdiver]

Just heard the BBC Radio 2 news announcement "Unilever say this decision is not related to Brexit" which immediately makes just about everybody think "really?"

It's a shame that the BBC couldn't either not make the comment, or else put it into proper context (as in likely reasons include cost savings and greater protection from hostile bids) rather than just put a "Brexit" tag on it.

Ah well. From a HYP perspective I suppose this is a "nothing to see here" moment; less chance of Unilever being forcibly taken away from small investors, a small cost reduction but otherwise BAU?

VRD

[moorfield]

Unilever says place in FTSE 100 Index still to be determined
https://uk.reuters.com/article/us-unile ... KKCN1GR0TI

So (hypothetically, for now) ULVR would no longer be a new (or topupable) HYP candidate based on index and yield under the Board Guidance, and yet I imagine many here would continue to hold.

If selected, such shares should have a dividend yield above the average for the FTSE100 index and be drawn from the constituents of the FTSE 350 index.

Which strikes me as a little absurd.

So: Should removal from the index mandate disposal of a HYP share?

[kiloran]

So: Should removal from the index mandate disposal of a HYP share?

The HYP "rules" were never intended to be mandatory. We are allowed to use our own brains and judgement, so if Unilever were to drop out of the FTSE100 index, I don't think we would be drummed out of the regiment for keeping or buying.

If the yield is OK, if it's a decent size company, if the cover is OK, if it meets the requirements of sector diversification, then that's perfectly OK.

--kiloran

[BristolDave]

I have heard - without any qualification that the main reason for the move was due to the Heinz bid last year. This shook the board and they don't feel that HMG provide enough protection to companies subject to hostile takeover bids - whereas they will have much more protection in the Netherlands.

The current Melrose / GKN fiasco is probably a good example of the issues that can be caused by lack of Government protection to our large / strategically important ? companies

[absolutezero]

Just heard the BBC Radio 2 news announcement "Unilever say this decision is not related to Brexit" which immediately makes just about everybody think "really?"

It's a shame that the BBC couldn't either not make the comment, or else put it into proper context (as in likely reasons include cost savings and greater protection from hostile bids) rather than just put a "Brexit" tag on it.

Ah well. From a HYP perspective I suppose this is a "nothing to see here" moment; less chance of Unilever being forcibly taken away from small investors, a small cost reduction but otherwise BAU?

VRD

That's the BBC for you.

Moderator Message:
Text edited. Derogatory comment removed. Raptor.

Glad about the London listing though. Didn't want to dump ULVR.

[kempiejon]

So: Should removal from the index mandate disposal of a HYP share?

The HYP "rules" were never intended to be mandatory. We are allowed to use our own brains and judgement, so if Unilever were to drop out of the FTSE100 index, I don't think we would be drummed out of the regiment for keeping or buying.

If the yield is OK, if it's a decent size company, if the cover is OK, if it meets the requirements of sector diversification, then that's perfectly OK.

--kiloran

Guidelines rather than rules.
I see the share price has been falling for a few months so the yield has been growing, the dividend amount grows every year and has done for 20 years and still I'd not accept it as a high yield share, it being very average yielding. A bit more dividend growth, a bit more share price downward pressure and the forecast levels might just tempt me but heretically there's a couple of investment trusts offering more for less risk. I do hold, like a few of us hereabouts I grabbed at an opportune moment, mine was in late 2009.