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Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

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idpickering
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Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165599

Postby idpickering » September 11th, 2018, 7:05 am

PUBLICATION OF PROSPECTUS AND SHAREHOLDER DOCUMENTATION

On 15 March 2018, Unilever announced the next steps in its transformation into a simpler, more agile and more focused business. This included the proposal to simplify Unilever's parent company structure from two legal entities, NV and PLC, into a single holding company ("New Unilever NV"), incorporated in the Netherlands, and to be listed in London, Amsterdam and, in the form of American depositary shares, New York. Unilever has today published the prospectus for New Unilever NV and the shareholder documentation relating to simplification.

Effecting simplification

Simplification of the current NV and PLC parent companies under New Unilever NV will be achieved through a combined process involving a UK scheme of arrangement (the "UK Scheme") for PLC and a Dutch statutory legal merger for NV (the "Dutch Merger").

One ordinary share in the capital of New Unilever NV will be issued for each NV ordinary share and for each PLC ordinary share, resulting in shareholders receiving shares in the capital of New Unilever NV that represent an equivalent economic interest.

The proposed simplification is subject to certain conditions, including the approval of shareholders in NV and PLC and applicable regulatory consents. The Executive of the UK Takeover Panel has confirmed that the UK Takeover Code will not apply to the simplification transaction.


https://www.investegate.co.uk/unilever- ... 00223425A/

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165603

Postby Dod101 » September 11th, 2018, 7:34 am

Thanks Ian. I have been looking for this. I am a certificated shareholder so I will no doubt receive the hard documents by post very shortly. Currently my intention is to vote against this as I see it as a takeover by the Dutch, and the loss to the FTSE100 is significant.

OTOH the Dutch holders of the Royal Dutch Shell shares agreed the incorporation of Shell in London and the world did not end for them. Still, Rotterdam, or any other Dutch city, is not exactly the pulsating heart of the financial system and London would surely be the obvious place for its incorporation. As it is we are apparently to have Unilever incorporated and managed from Holland. I do not either think the idea of protection against takeover is healthy as it could easily make the directors complacent. I think I will attend the meeting in London.

Just the sort of arguments which no doubt took place when the merger was agreed in the first place back in the last century when the dual system was agreed so that neither country lost out.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165607

Postby idpickering » September 11th, 2018, 7:42 am

You're most welcome Dod, and you raise some interesting points. For me. I'm just going to hold firm and watch from the side lines. Good to see your input hereabouts too.

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165608

Postby Dod101 » September 11th, 2018, 7:53 am

Well Ian, from your (geographical) lofty spot on the planet I daresay you can take a detached view :D

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165610

Postby uspaul666 » September 11th, 2018, 7:57 am

Thanks for the heads-up guys but Loss to the FTSE100? As I read it there will still be a “London listing” and there won’t be any irritating unrecoverable withholding tax charge like there is with TUI. Or am I wrong?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165615

Postby Dod101 » September 11th, 2018, 8:12 am

uspaul666 wrote:Thanks for the heads-up guys but Loss to the FTSE100? As I read it there will still be a “London listing” and there won’t be any irritating unrecoverable withholding tax charge like there is with TUI. Or am I wrong?


That seems to be correct from a quick skim of the info (voluminous) on the Unilever website. One thing they do say is that existing shareholders in PLC will continue to receive dividends in sterling. I hope that new shareholders in New Unilever NV will also be able to elect for sterling divs. I expect so.

The loss to the FTSE is only significant in the national sense and of course there will have to be a readjustment of holdings for many UK index funds but hopefully that will be compensated for by inclusion in the Euro equivalent.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165616

Postby idpickering » September 11th, 2018, 8:25 am

Dod101 wrote:Well Ian, from your (geographical) lofty spot on the planet I daresay you can take a detached view :D

Dod


My lofty spot is currently damp, overcast, and breezy, but such is the fickle weather up here in Orkney. Unilever are having their own damp and overcast session on the market thus far, down 0.25%, along with the general market. All noise quite obviously.

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#165632

Postby Arborbridge » September 11th, 2018, 10:05 am

I reckon this is all a sensible self-defence move. Thank goodness the Dutch system gave some protection to ULVR (unlike us British who seem to love selling off the family silver) because otherwise another great company would have been lost to US invaders. They are also ensuring less disruption from Brexit, I assume.

Not the best news, surely, but predictable and lessens various potential evils.

Arb.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166039

Postby absolutezero » September 13th, 2018, 11:09 am

Arborbridge wrote:I reckon this is all a sensible self-defence move. Thank goodness the Dutch system gave some protection to ULVR (unlike us British who seem to love selling off the family silver) because otherwise another great company would have been lost to US invaders. They are also ensuring less disruption from Brexit, I assume.

Not the best news, surely, but predictable and lessens various potential evils.

Arb.

I ignore all Brexit related commentary these days. It's all turned rather hysterical.
The company have even said the B word has nothing to do with this.

I'm minded to vote in favour.
It'll fall out of the FTSE 100 and trackers will have to sell it (a buying opportunity if the price falls) and be bought in large quantities on the Euro indices (so perversely might even go up in value).
It seems 'nothing has changed' with regard to a UK listing, sterling, dividends or taxes and it defends against a hostile takeover as you say above.

There aren't many companies I expect I will hold until the day I draw my last breath but if I had to sell everything and only keep one share, it would most likely be Unilever.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166058

Postby monabri » September 13th, 2018, 11:40 am

If I was a holder of ULVR, the only question I'd be asking is whether the move will help them continue to increase the dividend compound growth rate?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166073

Postby Gengulphus » September 13th, 2018, 12:11 pm

monabri wrote:If I was a holder of ULVR, the only question I'd be asking is whether the move will help them continue to increase the dividend compound growth rate?

My answer to that question is "probably, but only by a bit if they get it right - and if they get it wrong and end up with a dysfunctional corporate structure, they could decrease it by a lot".

And since there's nothing wrong with their current dividend compound growth rate (or at least, I find it very satisfactory as it is), my feelings about the change are still what I've said previously: if it ain't broke, don't fix it.

Gengulphus

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166077

Postby absolutezero » September 13th, 2018, 12:38 pm

Having read the relevant section of the rainforest that came through the letter box this morning, I'm not sure I'm a huge fan of this after all.

I'm not keen at all on nominee holdings.

If you are a CREST holder then your shares will not be allowed to be 'held or settled directly in CREST' because of New NV's overseas incorporation.
Shares will instead become Depository Interests (DIs) rather than actual shares and these DIs will 'represent entitlement to one underlying New NV share'. [My emphasis].
Not keen on that.

If you hold as a certificate then you will end up in their Corporate Sponsored Nominee (CSN) service.
The nominee appears to be the Registrar, Computershare, (though they do use the word 'initially' to describe Computershare as the nominee). I hardly need explain that nominee status means you are not the legal owner of the shares and you instead become the beneficial owner. Let's not open that can of worms here though!
I suppose a Registrar acting as nominee is about as secure as you are going to get but I definitely don't care for that.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166185

Postby scrumpyjack » September 13th, 2018, 9:46 pm

I shall vote against this, as the Dutch have not scrapped the withholding tax and seem unlikely to do so as there is a very large majority against scrapping it.

https://www.reuters.com/article/us-unil ... SKCN1LR1Q0

The fall back mechanism for avoiding extra tax on UK holders looks very dodgy and unreliable. It may even mean that every 'dividend' we receive will be treated as a partial CGT disposal and not a dividend as it will be structured as a capital payment. The Dutch will then probably close that 'loophole'

There is no incentive for UK shareholders to back this and I think many institutional holders will also vote against.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166192

Postby ayshfm1 » September 13th, 2018, 10:41 pm

This move is in my view little more than a complacent management seeking to protect itself. What is in it for me as a shareholder? Why would I want the management of the company to move it juristiction merely so as to protect their own jobs?

If I get the chance I'll vote against it. However because I hold them in a nominee account will I get to vote?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166195

Postby Dod101 » September 13th, 2018, 11:02 pm

ayshfm1 wrote:This move is in my view little more than a complacent management seeking to protect itself. What is in it for me as a shareholder? Why would I want the management of the company to move it juristiction merely so as to protect their own jobs?

If I get the chance I'll vote against it. However because I hold them in a nominee account will I get to vote?


I largely agree. Whether or not you get to vote is down to your nominee/platform. You should without delay ask them.

This matter goes beyond the outcome for us as collectors of dividends and as shareholders. Apart from being merely a cog in a nominee account and the Dutch withholding tax, there is also our national interest. Why on earth should we let the Dutch simply help themselves to a very long established and successful British company? Lord Lever will be turning in his grave. The same arguments must have taken place in 1927 or whenever the NV and PLC got together and the current joint arrangement was agreed so that both the Dutch and the UK national pride could be maintained.

I intend to attend the meeting on 26 October in London, make my point, and vote against the proposal. They need 75% of those voting to vote in favour and without that the PLC shareholders can derail the whole thing. I have no objection to unifying the structure but let us have a Royal Dutch Shell arrangement. Incorporation in London with the executive management in Rotterdam and A and B shares so that foreign holders (us) can avoid the Dutch withholding tax.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166234

Postby Dod101 » September 14th, 2018, 9:33 am

Actually Lord Leverhulme with apologies to the good Lord.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166243

Postby pyad » September 14th, 2018, 10:04 am

Dod101 wrote:...I intend to attend the meeting on 26 October in London, make my point, and vote against the proposal. They need 75% of those voting to vote in favour and without that the PLC shareholders can derail the whole thing. I have no objection to unifying the structure but let us have a Royal Dutch Shell arrangement. Incorporation in London with the executive management in Rotterdam and A and B shares so that foreign holders (us) can avoid the Dutch withholding tax.

Dod


I don't really care one way or another about this because it won't make any difference to HYPers holding ULVR but a couple of debatable points have arisen.

Private shareholders are irrelevant in big caps like ULVR so a vote against will count for nothing. I'm sure you know that the capital of big caps like ULVR is held overwhelmingly by institutions and the likelihood is that they'll vote in favour. Why? Because the company will have sounded out their major shareholders in advance to see if they'll agree. The fact that they are going ahead with it means that it is almost certainly a done deal.

Second, Dutch withholding tax on dividends. There aint going to be no Dutch tax on UK holders, the info document says this clearly, quote:

"Most PLC shareholders will automatically receive payments (dividend substitution payments) free of DWT"

and goes on to say that the payments should have the same consequences as a dividend.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166251

Postby IanTHughes » September 14th, 2018, 10:42 am

pyad wrote:I don't really care one way or another about this because it won't make any difference to HYPers holding ULVR but a couple of debatable points have arisen.

Thanks for bringing this discussion back HYP relevance


Ian
(Not a holder of ULVR - Yield has never been high enough)

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166285

Postby Lootman » September 14th, 2018, 12:27 pm

absolutezero wrote: it defends against a hostile takeove

The discussion about whether there will be net buying or selling because of the change of index is interesting, and I don't know the answer either.

But in general a company that has some kind of immunity from takeover will be worth less than one that can be taken over, because there is the concept of a "takeover premium" in any share price and for Unilever that might become zero.

In fact one can argue that the entire UK market carries a higher rating because we do not practice European-style protectionism.

And whilst the loss of Unilever's dividends might seem like a blow to anyone who invests solely for current income and an easy life, there is also the possibility that a larger capital sum resulting from a takeover could be reinvested to obtain a higher income.

I will vote against this although of course the effect of small investors in a proxy situation is negligible. I'd rather see a spinoff or demerger.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#166306

Postby absolutezero » September 14th, 2018, 12:57 pm

Lootman wrote:
absolutezero wrote: it defends against a hostile takeove

The discussion about whether there will be net buying or selling because of the change of index is interesting, and I don't know the answer either.

But in general a company that has some kind of immunity from takeover will be worth less than one that can be taken over, because there is the concept of a "takeover premium" in any share price and for Unilever that might become zero.

In fact one can argue that the entire UK market carries a higher rating because we do not practice European-style protectionism.

And whilst the loss of Unilever's dividends might seem like a blow to anyone who invests solely for current income and an easy life, there is also the possibility that a larger capital sum resulting from a takeover could be reinvested to obtain a higher income.

I will vote against this although of course the effect of small investors in a proxy situation is negligible. I'd rather see a spinoff or demerger.


The 75% yes votes combined with several of the big instituional holders saying they won't give it the nod might scupper it.
I'm going to say no. I've been convinced against the move.

The FT (unsure of their reliability but at least they aren't the ghastly BBC) are saying this Dutch thing is not a done deal.
One of the FT articles about it today is the typical whinging about brexit - despite the CEO saying Brexit is nothing to do with it - and this makes me wonder about the FTs reliability. I just want the news without the paper's opinion, thanks!

Unilever’s Dutch relocation details anger UK investors
https://www.ft.com/content/c6188df8-b587-11e8-b3ef-799c8613f4a1

If it's paywalled then just google the headline and click through.


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