Goodbye London: Unilever Set to Lose Its Place in the FTSE 100 -- Update
June 14 2018 - 6:40AM
Dow Jones News
By Saabira Chaudhuri
One of the U.K.'s biggest companies looks set to leave the FTSE
100, the country's blue chip stock index.
Unilever PLC said Thursday it was "extremely unlikely" it would
keep a place in the index after it consolidates its British and
Dutch legal structure in the Netherlands. It currently operates as
two separately listed companies, Unilever PLC in the U.K. and
Unilever NV in the Netherlands.
The move could force some investors -- namely funds that track
the FTSE 100 -- to ditch the company's shares. It will also rob
British and foreign investors invested in the index of some of
their exposure to consumer goods. Unilever will still retain a
listing in London but not one that allows it to be included in the
FTSE, of which it is one of the largest components.
On the flip side, Unilever's weighting in pan-European indexes
will increase. It will also be listed in the Netherlands and the
U.S.
"It's very clear to us that it's extremely unlikely that the new
NV shares will be included in the FTSE UK series," said Unilever
Chief Financial Officer Graeme Pitkethly said at a conference in
Paris. Despite the disappointment -- Unilever had initially hoped
to stay in the index -- he maintained that "simplification is the
right thing for the company."
Unilever in March said it would unify its dual structure,
picking the Dutch city of Rotterdam as its headquarters over
London. The decision came after a monthslong review sparked by an
unwelcome $143 billion takeover proposal from Kraft Heinz Co. early
last year.
The existing structure has been in place since Lever Bros., an
English soap maker, and Margarine Unie, a Dutch margarine producer,
agreed to join forces in 1929. The structure has evolved since
then, but the company continues to operate like separate legal
entities fused under a group-wide set of senior managers and
directors.
Critics had complained Unilever's structure is unwieldy and can
interfere with deal making -- including by hindering the company's
ability to use stock to make big acquisitions. The shares of the
two operating companies aren't convertible and the value of a
single share in each company must remain equal. That has made it
tough to issue new stock to fund a deal.
Apart from making M&A easier, moving to a single share class
eliminates certain administrative burdens. Board members must
currently attend back-to-back shareholder meetings in London and
Rotterdam once a year.
Mr. Pitkethly said he expects documentation about the
consolidation to be filed early in the third quarter.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
June 14, 2018 06:25 ET (10:25 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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