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Unilever (ULVR) Signals Probable Exit From FTSE 100

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PinkDalek
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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145646

Postby PinkDalek » June 14th, 2018, 5:21 pm

Dod101 wrote:Yes PD it was from that statement that I made my comments. The point is that they are today holding a consumer conference in Paris with Deustche Bank and Bloomberg reports that Unilever said that it is 'extremely unlikely' that they will remain in the FTSE100. ...


Yes I realised that (you said from memory earlier on) and having skim read this thread I did spot the FTSE100 issue is conveniently in the subject header!

I provided the link to the original announcement to introduce factors not so far mentioned in this thread, as far as I noticed. Amsterdam, New York and possibly retaining the Premium Listing (as against remaining in the FTSE100) etc.

My reply wasn't specifically to you though.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145648

Postby Lootman » June 14th, 2018, 5:36 pm

PinkDalek wrote:Amsterdam, New York and possibly retaining the Premium Listing (as against remaining in the FTSE100) etc.

Assuming that the New York listing you are referring to there is ticker UN, then they are depository receipts for the Dutch listing. As such they do not count as part of the market capitalisation, or at least should not. I don't know how the US indices handle ADRs, but to include them in an index would be to double count the value represented.

I'm not sure what you mean by "Premium Listing". Can you explain?

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145649

Postby PinkDalek » June 14th, 2018, 5:42 pm

Pass on your first part, I haven't looked.

Lootman wrote:I'm not sure what you mean by "Premium Listing". Can you explain?


It was wording they used but If you look here http://www.londonstockexchange.com/exch ... XSET1.html you'll see the Premium Main Market logo which leads here:

http://www.londonstockexchange.com/comp ... gories.htm

A Premium Listing is only available to equity shares issued by trading companies and closed and open-ended investment entities. Issuers with a Premium Listing are required to meet the UK’s super-equivalent rules which are higher than the EU minimum requirements. A Premium Listing means the company is expected to meet the UK’s highest standards of regulation and corporate governance – and as a consequence may enjoy a lower cost of capital through greater transparency and through building investor confidence.

At a cost, as Breelander has said earlier in the thread.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145682

Postby Gengulphus » June 14th, 2018, 9:40 pm

NeilW wrote:Are we now saying that RDSA shares no longer have withholding tax issues?

No, but we are saying that they will no longer have withholding tax issues - provided the Dutch government sticks to its intentions as reported in Unilever's March 15th RNS, and doesn't subsequently reverse them:

Unilever N.V. dividends are currently subject to Dutch dividend withholding tax at a rate of 15%. The Dutch government has announced that the Dutch dividend withholding tax will be abolished from 1 January 2020. Following simplification of the corporate structure and until such abolition, shareholders in the new Unilever holding company will be able to receive distributions in the form of a capital repayment for Dutch tax purposes which will be paid without Dutch dividend withholding tax.

Those interim arrangements to make capital repayments rather than dividends are being made by Unilever for its shareholders. Royal Dutch Shell could probably do likewise if it wanted to, but I very much doubt it will want to, as it already has the RDSA/RDSB share distinction to solve essentially the same problem in a different way. I won't be at all surprised if it wants to get rid of that distinction at some point after 1 January 2020, but trying to get rid of it before then and putting alternative arrangements in place along the lines of Unilever's has to be unnecessary complexity and expense!

Gengulphus

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145751

Postby Dod101 » June 15th, 2018, 9:42 am

I see that at least 75% of the PLC shareholders need to vote in favour of the move to Rotterdam and the reconstruction. Not that my holding will make any difference but I have decided to vote against the move unless other matters are revealed in the detailed papers (which have not yet been published) I do not mind them forming one company but I do not see why they cannot do a Shell and incorporate in London and manage it from Holland. Maybe Brexit has affected the decision but I think it all boils down to a) a Dutch Chairman, b) a Dutch CEO and c) they want to protect themselves against an unwanted takeover.

It seems to me to be a great shame if we Brits just sit and watch as a highly successful British company just disappears off to Holland and is removed from the FTSE, leaving it more dependent than ever on natural resources and financial companies. it is unbalanced enough as it is. Who is in line as a replacement?

It will simply become a Dutch Nestle, a foreign company we can buy shares in.

Dod

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145794

Postby moorfield » June 15th, 2018, 11:28 am

Dod101 wrote:Maybe Brexit has affected the decision but I think it all boils down to a) a Dutch Chairman, b) a Dutch CEO and c) they want to protect themselves against an unwanted takeover.


...and possibly d) a Dutch supply chain (see http://www.dailymail.co.uk/news/article ... itain.html). I don't believe Brexit hasn't affected Unileaver's decision in any way.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145802

Postby richfool » June 15th, 2018, 11:41 am

I think I read somewhere that they also want to increase their protection against possible takeover bids, as the recent Kraft attempt, and that they can fend those off better from Holland.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145811

Postby Dod101 » June 15th, 2018, 11:56 am

richfool wrote:I think I read somewhere that they also want to increase their protection against possible takeover bids, as the recent Kraft attempt, and that they can fend those off better from Holland.


Yup. That's what I said and I think that is probably a major reason.

Dod

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145815

Postby NeilW » June 15th, 2018, 12:07 pm

They may find those takeover rules fall foul of the rules of the big club we are thankfully leaving

In addition, Minister Kamp wants to encourage Dutch institutional investors to acquire larger stakes in Dutch companies, thus making the country's listed companies less of an easy prey for foreign bidders with deep pockets. Kamp has said that he will consult institutional investors to find out whether they experience any barriers to participation in Dutch companies and, if so, whether and how these can be eliminated. A public call such as this could, however, be contrary to the free movement of capital; the Court of Justice of the European Union rendered a judgment to this effect against Ireland for running a "Buy Irish" campaign.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145856

Postby Lootman » June 15th, 2018, 2:24 pm

Dod101 wrote:It seems to me to be a great shame if we Brits just sit and watch as a highly successful British company just disappears off to Holland and is removed from the FTSE, leaving it more dependent than ever on natural resources and financial companies. it is unbalanced enough as it is. Who is in line as a replacement?

If by that question you mean which share will be promoted to the FTSE-100 in its place, then I don't think that is very significant since there are usually a few promotions and demotions at every review, and the new entrants typically have a low market cap relative to the index average, absent special cases like privatisations. Its replacement will probably be in a different sector.

If instead you mean which share should investors buy to get a similar exposure, then there is no real UK equivalent. Most of the bigger consumer products companies have already been bought out. The most obvious alternatives are Nestle, as you note, although beware the rather severe tax withholding on any Swiss share.

Or Proctor and Gamble, although that has a smaller food division.

For some time I have preferred XLP - the US-listed consumer staples ETF for exposure to food and household products. It has P&G, Coke, Pepsi, Colgate etc. (Tobacco is in there too, annoyingly).

I agree with you 100% that the FTSE-100 is becoming increasingly skewed sectorally, and I have less and less use for it. To capture the missing sectors one increasingly has to look overseas, as do those who fear political risk in the UK as well.

I see no reason to sell Unilever because of this change, especially given the difficulty in finding a like-for-like replacement.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145870

Postby Dod101 » June 15th, 2018, 2:50 pm

Thanks Lootman. I am not thinking of selling Unilever. I was really speculating on which share might replace it in the FTSE. Isn't it just next in line in terms of capitalisation?

However your comments for something similar to Unilever are interesting and I have never used ETFs and in fact know little about them. Your suggestion might well be worth a look although the US market seems to be fully valued at the moment.

Back to Unilever. I do not expect that the move to Rotterdam, assuming it comes about, will do it any harm as it will be a member of the Euro index(I have forgotten the full title) at its full capitalisation and not just the 55% which NV claims at the moment. It will also be free of the Brexit complications.

Dod

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#145906

Postby Gengulphus » June 15th, 2018, 4:33 pm

Dod101 wrote:It seems to me to be a great shame if we Brits just sit and watch as a highly successful British company just disappears off to Holland and is removed from the FTSE, leaving it more dependent than ever on natural resources and financial companies. it is unbalanced enough as it is. Who is in line as a replacement?

According to http://www.ftserussell.com/files/press- ... -june-2018:

FTSE Russell operates a reserve list for the FTSE 100 Index, to be used in the event of a corporate action occurring between reviews e.g. merger, acquisition, delisting or suspension. In such cases, the reserve list constituent with the largest market capitalisation (on the date of the corporate action) will replace the outgoing constituent. With immediate effect, the following reserve list for FTSE 100 will be used:

• Weir Group
• Rightmove
• Mediclinic International
• Spirax-Sarco Engineering
• Kaz Minerals
• Wood Group (John)

I think that list is in the descending order of market cap; if so, and on the rather uncertain assumptions that Unilever gets removed before the September FTSE 100 review, that no other company causes this review's reserve list to be used first and that the market cap order remains unchanged, the answer to your question is Weir Group. (This paragraph edited to correct an oversight of mine spotted just after submitting this post.)

Gengulphus

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#146006

Postby richfool » June 15th, 2018, 10:14 pm

I do remember chocolate producers like: Rowntree, Mackintosh, Fry, Mars and of course Cadbury's and many of their products. All got taken over, some by each other; and we seem to be left with major non-UK businesses - Nestle and Kraft/Mondelez.

The Cadbury's takeover by Kraft was the most frustrating. I recollect Kraft agreed to not close the Cadbury (formerly Fry's) factory in Keynsham, Bristol and then later did close it. It is sad that we can't protect our heritage businesses from overseas acquisitions.

(Some of my favourites were Mackintosh's Rolos, Bourneville dark chocolate, Duncan's walnut whip :P ).

Further info: https://en.wikipedia.org/wiki/Rowntree%27s

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#146008

Postby Lootman » June 15th, 2018, 10:25 pm

richfool wrote:I do remember chocolate producers like: Rowntree, Mackintosh, Fry, Mars and of course Cadbury's and many of their products. All got taken over, some by each other; and we seem to be left with major non-UK businesses - Nestle and Kraft/Mondelez.

Unilever is more than just food though. There is also the household side and Lever Bros was mostly thought of as a soap company. (Port Sunlight village still seems to be thriving, but I digress). That's why I suggested P&G earlier.

This sector is so global that I tend to take the view that it does not necessarily matter if the UK isn't in the space. The products are pretty much the same everywhere. And the UK is still prominent in related sectors like tobacco and beverages, at least if you value defensiveness over sin.

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Re: Unilever (ULVR) Signals Probable Exit From FTSE 100

#146040

Postby Dod101 » June 16th, 2018, 7:43 am

In fact from their 2017 Annual Report, Food and Refreshments make up 43% of their turnover and 40% of their profit, so that is the smaller part of Unilever and I think it is since the year end that they have sold their spreads business.

The biggest business is Personal Care with nearly 48% of their profit from that divisions. The balance is of course Home Care.

Dod


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