A major UK shareholder in Unilever is to vote against the FTSE 100 company’s plans to scrap its dual British-Dutch structure and is urging other investors to follow suit.
The asset management arm of the insurer Aviva is opposing Unilever’s plans to move to a sole headquarters in Rotterdam and incorporate in the Netherlands under a single holding company.
The proposed move means that Unilever, which makes consumer goods ranging from Marmite to Dove soap, will drop out of the FTSE 100 index, forcing UK tracker funds and those with strict UK investment mandates to sell their holdings.
David Cumming, the chief investment officer for equities at Aviva Investors, said: “We are not supportive and we will vote against it. It doesn’t add any value for us, we lose quite a large company from the index and we don’t see any justification for the move. We would encourage other institutional shareholders to do the same as us.”
Cumming told BBC Radio 4’s Today programme: “I think they will struggle; I don’t see logically why any UK shareholder would support Unilever’s decision to go Dutch because there is no upside but there is downside – and we lose an excellent company from the index.”
Aviva Investors owns a 1.4% stake in Unilever.
Iain Richards of Columbia Threadneedle Investments, another Unilever shareholder, said: “We continue to agree that restructuring Unilever makes sense but are still of the view that Unilever’s approach discriminates against UK shareholders.”
For its proposals to pass, Unilever needs the backing of 75% of UK shareholders and 50% of Dutch investors, in separate votes in Rotterdam on 25 October and in London on 26 October.
Unilever, which has had more than 150 investor meetings since it announced the plans in March, said: “We have engaged extensively with our shareholders and we believe the vast majority are fully supportive of the board’s proposal.”
It argues that simplifying the company will make it easier to sell and buy assets and improve governance. It says 55% of its shareholders are based in the Netherlands and the shares listed in Amsterdam are more liquid.
The planned relocation deals a big blow to the UK’s status as a financial centre but Unilever insisted the proposals were not related to Brexit. Its dual structure dates back nearly a century, to its creation from the 1929 merger of the British soap maker Lever Brothers and the Dutch company Margarine Unie.