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Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

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idpickering
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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168012

Postby idpickering » September 21st, 2018, 7:17 pm

Dod101 wrote:
Ian You must do what you feel most comfortable with, but Unilever is still a good business despite this kerfuffle.

Dod


Thank you Dod. In fact I’d go so far as to say they’re a great company.

Ian

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168022

Postby ayshfm1 » September 21st, 2018, 7:57 pm

I would like to say I don't actually think Unilever management have done that good a job.

Given the basket of brand etc it's a company that just about any muppet could run.

As Peter Lynch said

"Invest in businesses any idiot could run because someday one will."

Unilever is a good example of one of those businesses.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168034

Postby Dod101 » September 21st, 2018, 8:54 pm

ayshfm1 wrote:I would like to say I don't actually think Unilever management have done that good a job.

Given the basket of brand etc it's a company that just about any muppet could run.

As Peter Lynch said

"Invest in businesses any idiot could run because someday one will."

Unilever is a good example of one of those businesses.


Well I think they have done a good job to have survived in their current form for 90 years or so. How many companies have fallen by the wayside in that time? They have done this by good research, manufacturing, and marketing, coupled with a very conservative attitude to finance (for which of course they almost paid the price last year) Do you think the basket of brands just invented themselves? If you think any idiot could run a company/group the size and complexity of Unilever I would have to disagree with you.

The trouble for Unilever is that nowadays everything is focussed on the next set of results and financial so-called 'efficiency'.

That is why I like family controlled companies. They do not need to worry about predators, only long term survival, by being efficient at the business end and nearly always conservatively managed.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168039

Postby Arborbridge » September 21st, 2018, 9:07 pm

ayshfm1 wrote:I would like to say I don't actually think Unilever management have done that good a job.

Given the basket of brand etc it's a company that just about any muppet could run.

As Peter Lynch said

"Invest in businesses any idiot could run because someday one will."

Unilever is a good example of one of those businesses.


Youy've just made a very good argument for holding shares in Unilever in that case. A ringing endorsement of the investment case!

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168042

Postby Arborbridge » September 21st, 2018, 9:14 pm

Dod101 wrote:The trouble for Unilever is that nowadays everything is focussed on the next set of results and financial so-called 'efficiency'.

That is why I like family controlled companies. They do not need to worry about predators, only long term survival, by being efficient at the business end and nearly always conservatively managed.

Dod


That's what I meant earlier about the problem with the US attitude to business, and maybe this is Umilever's way of trying to avoid the long shadow of that type of short termism. That shadow has already had some influence of the company if your first sentence here is true.

BTW, you've mentioned family firms recently, a couple of times, but as I remember most of your investments are in none-family controlled firms - apart from Mucklow. Have you favoured others as well? Is this a new turning for you?


Arb.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168060

Postby Dod101 » September 21st, 2018, 11:08 pm

Arb (Warning to mods. this is not particularly HYP)

I do like family controlled companies but I do not hold many at the moment. Just sold ABF. Going nowhere. Mucklow and Henry Boot might just about pass muster as HYP shares and are family controlled.

Caledonia and RIT are of course ITs and outside of this Board's remit.

Dod (I will sneak away now before the Mods get me)

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168073

Postby Arborbridge » September 22nd, 2018, 7:23 am

Dod101 wrote:I do like family controlled companies but I do not hold many at the moment.


It's a genuinely interesting point though. I dare say there are likely to be very few family firms which past muster as HYP shares simply because they will never get big enough.

However, whether it's worth thinking of as an extra safety factor is unlikely: after all, SBRY used to be very much a family firm. Families become diffuse and the influence then dilutes.


Arb.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168081

Postby Gengulphus » September 22nd, 2018, 8:37 am

Dod101 wrote:Well I think they have done a good job to have survived in their current form for 90 years or so. ...

Sorry, I disagree. The management of Unilever weren't even born 90 years (or so) ago! And Unilever has changed in all sorts of ways over that time...

Agreed that the company has done a good job to have survived (and thrived) for the last 90 years or so. But they've done it by changing, not by staying the same. And one of the things they've changed is their management... So pointing at Unilever's long and successful history is not a very good defence of the job Unilever's current management have done - the recent part of it does say that they haven't done a positively bad job, but not against ayshfm1's statement that "I don't actually think Unilever management have done that good a job".

However, I would ask ayshfm1 what the basis of that belief is, because the reasons given in:

ayshfm1 wrote:Given the basket of brand etc it's a company that just about any muppet could run.

As Peter Lynch said

"Invest in businesses any idiot could run because someday one will."

Unilever is a good example of one of those businesses.

basically don't say anything about how good Unilever's management is. If Unilever really is that sort of company (and I'm not saying it is!) then the implication is basically that anyone could run it - so all that quote says about Unilever's management is that they are people, not that they are idiots!

Basically, if either of you wants to back up an opinion that Unilever's management have done well/poorly, you need to identify a challenging issue they have faced and say why you think they have dealt with it well/poorly (or preferably more than one such issue). Not argue about Peter Lynch's quote, which is advice about how to select the businesses you invest in, not about how to judge their managements.

Finally, just to make my own position clear, I would be interested in seeing a discussion about the quality of Unilever's management: it does seem quite relevant to this simplification proposal in my view. But I don't currently have any strong views on it myself, and so am unlikely to be able to contribute to such a discussion, other than (as here) by trying to keep it focussed on the quality of Unilever's management and not something else...

Gengulphus

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168099

Postby Dod101 » September 22nd, 2018, 9:31 am

I at least was not writing about the current management over the 90 years since the merger. I think that is obvious. I am referring to the whole culture of Unilever which is long term and conservative as far as I can see. Obviously businesses change over 90 years and they have always made clear that they are running a portfolio of businesses and brands. Like all portfolios, it will change over time. They have since I have held them (around 1995) had their ups and downs but they have survived with few hiccoughs and a dividend going in the right direction. If anyone attends their AGM or thoroughly reads their Annual Report I think it is obvious that an idiot would be unlikely to make much of managing it.

The fact that Unilever has been able to increase its dividend by 8% and had a big share buyback in response to the Heinz Kraft bid indicates their conservative stance. For any company, survival is the first priority and progress and expansion comes next. That is how and why Unilever is now a world class brands company. It did not get there by being run by idiots and I doubt in any case that that is really what Peter Lynch meant. More like Buffett's shunning of technology companies (until recently anyway)

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168107

Postby Gengulphus » September 22nd, 2018, 9:57 am

Dod101 wrote:I at least was not writing about the current management over the 90 years since the merger. I think that is obvious. ...

No, it wasn't quite obvious. What was obvious was that when you said "they", either you were talking about the current management and were saying something nonsensical about it or you weren't talking about the current management and so were not responding to what ayshfm1 said about it in your quote.

Thanks for clarifying that it was the latter.

Gengulphus

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168109

Postby ADrunkenMarcus » September 22nd, 2018, 10:00 am

Culture is very hard to measure on a spreadsheet. In the short term, anyone can slash their marketing budget and profits may go up significantly for a short time at the risk of long term damage to sales, growth, pricing power and market share. We might see higher margins, a higher share price and higher gearing if the company tries to juice up its returns. (I read that Pepsi and Coke had similar market shares back in the early 1990s and yet Pepsi was the winner in blind taste tests of American consumes. Fast forward over two decades and Coke's market share in the United States is broadly stable whereas Pepsi's has fallen markedly. That did not need to happen. The brand was neglected and under-invested in, undermining its appeal.) I think a long term approach is a key element of Unilever's way of working and I hope it continues.

Best wishes

Mark.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168150

Postby mattman74 » September 22nd, 2018, 1:34 pm

Just received this via email - it is a circular from the Unilever chairman.
It looks as though they may be a bit worried.


-----------------------------------------

Dear Shareholder,

I hope by now that you will have had a chance to review the documents we sent to you on 11th September. They detailed our plans to simplify Unilever’s structure by moving from two separately listed entities to become a single united company.

Over the last two weeks there has been a lot of public attention regarding this proposal, so I would like to take this opportunity to ensure that you have the correct facts about what it means for you as a Unilever shareholder.

The Board’s proposal for simplification intentionally preserves those things which we believe are of particular importance to our UK-based PLC shareholders. For example:

Unilever will remain listed in London. You will still be able to buy and sell Unilever shares on the London Stock Exchange, in British Pounds
You will continue to receive dividends in British pounds, and there will be no change to our policy of seeking to pay an attractive, growing and sustainable dividend
You will continue to be able to meet your Board and management at an annual meeting in London.
Since we published our Scheme documents, FTSE Russell Group has ruled that the new single holding company will not be included in the FTSE 100 index following simplification, something which has received significant public attention. This could have an impact on some institutional investors with specific investment mandates but will have no impact on the ability of individual private shareholders to hold and trade Unilever shares.

There has also been some concern expressed about whether our existing UK shareholders will be liable for Dutch dividend withholding tax (DWT). The Dutch parliament is currently putting through legislation that should abolish DWT from 1 January 2020. We believe it to be unlikely that abolition will not happen, but nevertheless we have a robust fallback solution which is free of Dividend Withholding Tax. This is explained in more detail in the documentation.

Finally, there have been reports that our decision to simplify our structure means we are leaving the UK. That is not the case. Unilever is an Anglo-Dutch company and our commitment to the UK remains as strong as it has ever been during our long history. Indeed, we have announced our choice of the UK as the headquarters for our two fastest-growing divisions: Beauty & Personal Care and Home Care. The number of people we employ in the UK and the £1bn we spend here each year will not be affected by any of the changes we have proposed.

The Board’s proposal to simplify Unilever’s structure aims to create value for our shareholders by:

Simplifying our structure, allowing us to compete even more effectively in today’s rapidly changing world
Giving us greater flexibility for strategic portfolio change, including demergers or share-based acquisitions – the same flexibility that is available to most of our competitors today
Moving from having two sets of shareholders to just one, with each share carrying the same voting rights, creating true shareholder democracy with a “one share, one vote” principle
Graeme Pitkethly, Chief Financial Officer of Unilever, has recorded a short video that answers some of the main questions we have had to date from investors. Please visit www.unilever.com/simplification.

The Board asks for your support by voting in favour of this proposal.

Best regards,

Marijn Dekkers
Chairman, Unilever
Computershare Investor Services PLC is registered in England & Wales, Company No. 3498808, Registered Office: The Pavilions, Bridgwater Road, Bristol BS13 8AE. The main business of Computershare Investor Services PLC is the provision of share registry and shareholder services.

Please visit the following website to read the Computershare legal notice: http://www.computershare.com/disclaimer/

-------------------------

I am still not convinced that this proposal is in my best interests. Still it is interesting to see Unilever's argument.


Matt

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168155

Postby Alaric » September 22nd, 2018, 2:12 pm

Unilever Chairman wrote: We believe it to be unlikely that abolition will not happen, but nevertheless we have a robust fallback solution which is free of Dividend Withholding Tax.


That was some form of capital distribution I believe. That would be potentially liable for UK CGT and if this form of disguised dividend came into widespread use, you couldn't rule out a UK or Dutch Government legislating to treat it as dividend.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168161

Postby ayshfm1 » September 22nd, 2018, 2:41 pm

The nub of the withholding tax question for me, no matter how it gets dressed up, is that we have to put our trust in the Dutch Government to play fair (and all subsequent governments). Once the money comes in via Holland then it doesn't matter how robust the scheme is on paper it can be rendered fragile with sweep of a Dutch legal pen.

We also know that the arrangement Shell has is under fire, a change in Government could find us charged withholding tax on them. The more money involved the greater then temptation and the sums involved are not small.

Hence anything ULVR says on the matter is just spin. Which take me full circle to the why would I wants this? I don't.

On the subject of ULVR management. It isn't that I think they've executed badly, I just don't see any evidence they executed well. And as mentioned I think ULVR is a cash machine that would generate cash pretty much regardless of how it was run, the products sell themselves.

The Kraft bid tells us that at least someone thinks they can run it better than the current encumbents.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168164

Postby Breelander » September 22nd, 2018, 3:15 pm

mattman74 wrote:Just received this via email - it is a circular from the Unilever chairman.
It looks as though they may be a bit worried....
...I am still not convinced that this proposal is in my best interests. Still it is interesting to see Unilever's argument.


My main concern is that the new shares will be Crest Depository Interests (CDI).

For a certificate holder that means they will not get a replacement certificate, rather they will get a single-company nominee holding held initially by the registrar.

For a nominee holder like me, the question is whether your broker can hold CDIs in their nominee account. I know from previous experience with the Vodafone/Verizon deal where Verizon CDIs were issued that some brokers won't hold them. I have yet to find out if the one holding my ULVR can or cannot - they haven't said (yet).

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168166

Postby Alaric » September 22nd, 2018, 3:51 pm

Breelander wrote:For a nominee holder like me, the question is whether your broker can hold CDIs in their nominee account. I know from previous experience with the Vodafone/Verizon deal where Verizon CDIs were issued that some brokers won't hold them. I have yet to find out if the one holding my ULVR can or cannot - they haven't said (yet).


That's how Shell works and I'm not aware of any Broker refusing them.

Wasn't the problem with Verizon that it was an American share, with all the complications that might ensue?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168168

Postby Breelander » September 22nd, 2018, 3:56 pm

Alaric wrote:That's how Shell works and I'm not aware of any Broker refusing them.


Shell RDSA and RBSB shares are not CDIs - that's the crucial difference.

Wasn't the problem with Verizon that it was an American share, with all the complications that might ensue?


The problem with Verizon CDIs was that although the were listed and traded on the London stock exchange, Barclays Stockbrokers' own internal rules meant they were not in the (very short) list of CDIs they were prepared to hold.
Last edited by Breelander on September 22nd, 2018, 4:03 pm, edited 1 time in total.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168169

Postby mike » September 22nd, 2018, 3:57 pm

Breelander wrote:
mattman74 wrote:Just received this via email - it is a circular from the Unilever chairman.
It looks as though they may be a bit worried....
...I am still not convinced that this proposal is in my best interests. Still it is interesting to see Unilever's argument.


My main concern is that the new shares will be Crest Depository Interests (CDI).

For a certificate holder that means they will not get a replacement certificate, rather they will get a single-company nominee holding held initially by the registrar.

For a nominee holder like me, the question is whether your broker can hold CDIs in their nominee account. I know from previous experience with the Vodafone/Verizon deal where Verizon CDIs were issued that some brokers won't hold them. I have yet to find out if the one holding my ULVR can or cannot - they haven't said (yet).


Just a bit of experience from when BHP Billiton spun off South 32 as DIs. I held BLT in certificated, CREST, and my SIPP (hence nominee).

Those DIs resulting from the certificated shares were held by the registrar.

Those DIs resulting from the CREST & SIPP shares were held in the relevant account without problem.

There was a time limited offer to transfer free of charge the registrar-held DIs to an account of my choosing, and I transferred them to my CREST account.

Mike

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168170

Postby Arborbridge » September 22nd, 2018, 3:58 pm

ayshfm1 wrote:The Kraft bid tells us that at least someone thinks they can run it better than the current encumbents.


Run it differently, certainly, and run it for themselves to profit from also, I dare say. Running it "differently" isn't necessarily in the long term interest of either HYP-type investors, current employees or UK Plc.
Kraft recognised a good thing when they saw it and wanted to muscle in on the action - that's all it amounted to. Expediancy, a fast buck.

And who owns Cadbury's now? - what a woeful and destructive tale that was in my view. I do accept that this kind of event is how capitalism keeps re-inventing itelf, but it isn't eddifying and can be uncomfortable to those caught up in the dog fighting.

Arb.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168172

Postby Arborbridge » September 22nd, 2018, 4:07 pm

ayshfm1 wrote:The nub of the withholding tax question for me, no matter how it gets dressed up, is that we have to put our trust in the Dutch Government to play fair (and all subsequent governments). Once the money comes in via Holland then it doesn't matter how robust the scheme is on paper it can be rendered fragile with sweep of a Dutch legal pen.



There are lots of things which could happen, but I'm inclined to wait and see what comes to pass. Just like any other share, there are many changes which might transpire in time, and I'm not about to worry about what a future Dutch government may or may not do. I will treat Unilever like any other share: if a share becomes unattractive HYP-wise one will then assess whether to retain it or swap it for something more agreeable.

To echo Pyad zzzzz.....


To IDP: wot no pickering? You rather surprised me by your precipitatness.


Arb.


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