Market welcomes Unilever’s change of heart as shares rise

Helal Miah comments on the market reaction to Unilever’s change of plans

Article updated: 5 October 2018 10:00am Author: Helal Miah

  • Pressures came from many fronts including the fact Unilever would have fallen out of the FTSE 100 leaving fund and active managers being forced sellers
  • Investors brush aside potential cost savings that would have come with relocation
  • The Share Centre recommends Unilever as a ‘buy’ for medium risk investors

It is welcome to see the Unilever board cave in to the majority of investor’s pressure to keep its dual listed structure and not move its headquarters to the Netherlands. This pressure came from many fronts and angles, including the fact that it may have resulted in the shares leaving the FTSE100 with tracker funds and active managers being forced sellers. We would also like to think that our very own chairman, Gavin Oldham OBE has played a part in this decision having called on the industry as well as the Business Secretary asking for the government to take action over the fact that nominee investors would not have had a say in the vote.

Investors have brushed aside the potential cost savings that could have been made if the relocation was to go ahead, as judging by the market reaction first thing this morning, the news was welcomed, with the shares opened higher while the rest of the market edged lower. As well as the cost savings that could have been made, the board’s other motive of protecting the company from a takeover will also have been lost.

Nonetheless, this is good news for UK investors as many active and tracker funds will now continue to be able to invest in this company offering the diversification they need, there are not too many other companies in the UK offering what Unilever has to offer. Unilever is a top quality company, with a diverse and defensive product and brand portfolio with increasing exposure to the fast growing emerging markets. This is a low to medium risk company and at The Share Centre, we now more enthusiastically rate them as a buy for long term investors.

After Gavin has been calling on the government and the industry to do more for personal investors holding Unilever after it was revealed that the consumer goods giant was planning to deny them their rights in the impending vote to move its headquarters.

Our Chairman, Gavin Oldham, explains how we feel victorious as Unilever caves to shareholder rights pressure. 

We’re delighted to hear the news this morning that Unilever has dropped its proposal to move its primary listing to the Netherlands. This is in no small part due to the widespread opposition of personal shareowners, whose views were particularly important due to the “member count” vote.

The Share Centre led a spirited campaign to ensure that the rights of nominee share owners, enshrined in part 9 of the companies act 2006, were not denied in this crucial vote, and was prepared to back legal action if Unilever had not backed down.

I am delighted with Unilever’s decision, but the company’s denial of shareholder rights cannot now be overlooked. I have therefore asked the London Stock Exchange and our trade association PIMFA to seek clarification from the Confederation of British Industry that listed companies will in future be expected to comply with this vital part of company law, which provides shareholder rights to the huge number of nominee-based personal share owners in the United Kingdom.


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Helal Miah portrait photo
Helal Miah

Investment Research Analyst

Helal has spent time as an independent proprietary trader, trading the US equity futures market. He has also helped manage private client, institutional, retail and hedge funds. His qualifications include the Securities Institute Diploma and the Investment Management Certificate.