Shares in consumer giant Unilever (ULVR) were among the few risers on Thursday, adding 1.4% to £44.40, while the FTSE 100 index shed 2.2% over the re-emergence of concerns over global growth and US coronavirus cases passed 2m.
Behind today’s move was the news that the Anglo-Dutch firm will change its legal status from a dual-headed legal structure to a single UK entity to increase its ‘strategic flexibility for portfolio evolution’, including share-based M&A deals, and improve its corporate governance by ‘creating for the first time an equal voting basis for all shareholders.’
After the legal structure is simplified there will be one market capitalisation, one class of shares and one ‘global pool of liquidity’, although the firm will maintain its separate listings in London, Amsterdam and New York.
Last year Unilever began a full review of its categories and brands to identify which areas of the portfolio needed improvement and which it might be better off selling rather than retaining.
One example is the tea business, which has been slated for disposal, but a sale under the dual legal structure throws up various issues as the firm found when it disposed of its spreads business to private equity firm KKR at the end of 2017.
This isn’t the first time that Unilever has tried to simplify its business. In October 2018 it announced a plan to form a single holding company in the Netherlands and to issue all UK shareholders with Dutch-listed shares.
However, big institutions were up in arms about the plan and the firm had to scrap it less than a month later.
Chairman Marijn Dekkers said at the time the company continued to believe that simplifying its dual-headed structure would provide opportunities to accelerate value creation, but he acknowledged that the proposal had 'not received support from a significant group of shareholders' and therefore the firm had backed down.
