Unilever disappoints investors by retaining its dual structure

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The Independent Online

Unilever, the Anglo-Dutch consumer products group, dumbfounded investors yesterday by opting not to follow the lead set by Royal Dutch Shell and scrap its 75-year-old dual stock market listing.

An "exhaustive" seven-month review concluded that moving to a single structure, with one global headquarters, would be "disruptive" and costly, the chairman Antony Burgmans said.

The decision flew in the face of speculation and underwhelmed the City, which marked Unilever's shares 10p lower at 572.5p. Instead, attention focused on when the group would bring in an outsider to replace Mr Burgmans, the former co-chairman who moved to a non-executive role in May.

The review was the third prong of a shake-up that has seen Unilever bow to convention by unifying its two boards and creating separate roles for a chief executive and non-executive chairman. Analysts had hoped that merging the Anglo and Dutch arms would send a strong message that the sluggish Unilever of old, which has habitually missed its financial targets, was no more.

Graham Jones, at Panmure Gordon, said: "It would have been a signal that Unilever was prepared to bite the bullet and change and that its management was moving on from history so it is slightly disappointing." Another analyst added: "The City hoped for more."

On a call with analysts, Mr Burgmans was forced on to the defensive. "We cannot engage in a process ... just for the sake of it. We would have been prepared to accept disruption but there should have been tangible benefits for our business and shareholders. In the absence of these compelling benefits we decided it [scrapping the dual listing] was not worthwhile."

Patrick Cescau, the chief executive, said he was not disappointed by the outcome. "Performance is what matters to me, not the niceties of corporate structure," he said.

Unilever said maintaining the status quo had tax advantages, was cheaper and would allow management to focus on improving the group's operational performance. It also offered shareholders a choice between holding sterling and euro-denominated shares.

It did tweak its existing structure, by harmonising the value of its Amsterdam and London-listed shares and changing its constitution to allow greater flexibility in allocating assets between the two parent companies. It will also give shareholders the right to nominate directors to the board. Mr Jones said the decision to give the Plc and NV shares one-for-one equivalence "seems a lot of effort for little return". Unilever will split its Dutch-listed shares and consolidate its London-listed ones.

Unilever also revealed it is to merge assets across its 98 separate worldwide pension schemes to try to gain greater control over the funds. It is thought to have a deficit of about £3bn across its schemes, of which the UK accounts for £400m. NM Rothschild, UBS, John Studzinski, HSBC's co-head of investment banking, and Michael Pescod, of Tricorn Partners, advised Unilever.

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