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"Longstanding UK shareholders may be forced to sell their stock" REUTERS/Arnd Wiegmann

Major Shareholder Rejects Unilever’s Plans to Relocate its Headquarters

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"Longstanding UK shareholders may be forced to sell their stock" REUTERS/Arnd Wiegmann

Aviva Investors, a top Unilever shareholder, said it would vote against moving the company’s headquarters. Unilever plans to move its headquarters out of the United Kingdom and into the Netherlands.

“No Upside”

One of Unilever’s biggest shareholders, Aviva Investors, has announced its intentions to vote against the company’s intentions to move its headquarters to the Netherlands. This announcement has occurred as a growing number of investors voice their concerns regarding the planned move.

Aviva Investors said if Unilever were to leave the United Kingdom, British shareholders would be required to sell their shares, the BBC reported. Aviva went on to say that the shareholders would be offered “no upside.”

Unilever’s Move to Simplify

According to Unilever, the intention of the move was to simplify its corporate structure. That said, while it has been planning to move its headquarters for months, the Dove soap and Marmite maker still requires 75 percent of its shareholders to vote in favour of the decision in order to proceed with it.

Currently, Unilever functions with a dual headquarters. One is in London and the other is in Rotterdam. In March 2018, the company announced its plans to move to a single headquarters located only in the Netherlands.

One Move Changes Everything

Unilever is among the largest companies in the U.K.’s FTSE 100 share index. Its current market value is estimated to be about £124 billion. That said, if Unilever’s headquarters were to move out of London and exclusively to Rotterdam, the United Kingdom’s regulations would bar it from maintaining that inclusion in the FTSE 100.

Shareholders are concerned that such a move would generate a massive rush to sell off the stock, generating considerable losses.

Forcing UK Shareholders to Sell Stock

“Aside from the fact it is disappointing to see a world-class company like Unilever leave the UK, it also means longstanding UK shareholders may be forced to sell their stock,” said Aviva Investors chief investment officer for equities, David Cumming. “I don’t see logically why any UK shareholder would support their decision to go Dutch, because there is no upside only downside.”

Factoring in the timing of the plan to move, many believe the decision is a result of Brexit. That said, Unilever denies this is the case. According to Cumming, he was under the impression that Unilever was seeking to obtain “protection” following last year’s unsuccessful attempt at a takeover by Kraft Heinz from the U.S.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.