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Victory for fund managers as Unilever ditches UK exit plan

Victory for fund managers as Unilever ditches UK exit plan

Unilever has dropped its plans to switch its corporate headquarters to the Netherlands after a wave of protests from UK fund managers.

Fund management groups as diverse as Lindsell Train and Legal & General Investment Management (LGIM) had protested that Unilever’s plan would remove the shares from the FTSE 100 and force them to sell them at an unattractive price.

Unilever needed 75 per cent of UK shares to vote in favour of the plan, and 50 per cent of individual shareholders but the company announced this morning (5 October) it was scrapping the plan.

In a statement to the London Stock Exchange (LSE), Unilever said: "We have had an extensive period of engagement with shareholders and have received widespread support for the principle behind simplification.

"However, we recognise that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw."

Unilever said its plans were not a result of the UK leaving the European Union, but rather to make the company structure simpler. In addition, the Dutch government recently announced tax changes to encourage companies to locate corporate headquarters in the country.

But the plan was opposed by Aviva Investors, M&G, Columbia Threadneedle, LGIM and Lindsell Train.

Funds in the IA UK All Companies and Equity Income sectors must have 80 per cent of the capital in UK listed shares. Unilever being re-classifed as an overseas holding in those funds may push them over the limit.

UK tracker funds would also have to sell the shares as the role of those funds is to passively buy the shares of an index, if Unilever ceases to be part of the index, then those funds have to sell the shares.

A statement from the Investment Association, the trade body representing open-ended fund managers, said: "The feedback from many of our members has been that there was no compelling reason for Plc shareholders to accept the proposed simplification in this form. They did not believe it would be in the long-term interests of their clients, and would have resulted in many shareholders being forced to sell their shares.

"We welcome the fact that Unilever has listened to the feedback from their shareholders and not pushed ahead with their plans. We look forward to engaging with the company on their future plans."

david.thorpe@ft.com

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