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August 11, 2020

Unifying Unilever eyes proposed Dutch tax law change

Unilever is monitoring the passage of a proposal to change tax law in the Netherlands, a move that would affect the company's idea to change its own legal structure.

By Dean Best

Unilever has cautioned a proposal to change tax law in the Netherlands could derail the FMCG giant’s plan to change its legal structure.

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The Knorr and Magnum maker wants to unify its legal structure under a single entity headquartered in London.

Since Unilever’s formation in 1930, the company has been owned through two separately listed companies, a Dutch NV and a UK plc. The company plans to create one class of shares. Shareholder meetings on the plans are set for September and October.

In documentation released yesterday (10 August), Unilever said a member of the Dutch Green Party had tabled a bill that would look to impose a tax on certain transactions.

The bill would need to pass the Netherlands’ two legislative houses, while Unilever said it had legal advice the measures, if enacted and applied to the company’s unification plans, would mean the Dutch government “would be in manifest breach” of certain international regulations.

Nevertheless, Unilever has estimated the financial impact the bill could have should the proposal become law and is administered on its unification plan.

“If the bill were enacted in its present form and applied to unification, the [NV and plc] boards believe that proceeding with unification, if it resulted in an exit tax charge of some EUR11bn (US$12.96bn), would not be in the best interests of Unilever, its shareholders and other stakeholders as a whole,” Unilever said.

“The bill may be subject to amendment during the parliamentary process and it is not clear when, or indeed if at all, the bill may be enacted, or in what form. Accordingly, the ultimate effect of the bill on the proposed unification is not clear at present. The boards intend to proceed with their proposals provided that unification, in the boards’ view, remains in the best interests of Unilever, its shareholders and other stakeholders as a whole. As the situation develops, the boards will continue to assess all options available and will update shareholders as appropriate.”

Unilever has in the past reviewed its corporate structure. In 2018, the Hellmann’s owner opted to withdraw a proposal to unify the business under a new Dutch holding company.

The company believes its latest move will give it “strategic flexibility for portfolio evolution”, which may include acquisitions or “demergers”.

Under the plans, Unilever’s food and refreshments division, which generates 40% of its turnover, will remain headquartered in Rotterdam, along with its research and development unit. The home care, and beauty and personal care business divisions, will continue to be located in the UK.

A shareholder vote on the unification for Unilever NV investors is set for 21 September. Meetings for Unilever plc shareholders will take place on 12 October. Unilever says its unification is expected to be completed over the weekend of 21 and 22 November, meaning that the expected last day of trading in Unilever NV shares would be 20 November.

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img

Unilever- A Deep-dive into Product Launches and Advertising Strategy

Unilever product advertising is mainly through mainstream TV channels. Out of the products advertised so far at least 50% (over 850) of ads have been run on TV, while print media comes second with 496 ads. Unilever also utilizes social media platforms for advertisement. Unilever products are categorized by innovation ratings and tags in our product launch database. The North American region consists of almost 74 products with innovations related to the formulation of the product. Europe and other regions also have more products categorized under formulation-related innovation, followed by the packaging and positioning of the products. Most Unilever products are tagged with “High Vitamins”, “Recyclable”, and “Natural” tags to understand what the product differentiator is from other products available in the market. The majority of products belong to the personal care industry with a total of 5,788 products to date. This report, through the Unilever Example, illustrates how GlobalData Explorer enables you to:  
  • Track product launches by FMCG companies to get an understanding of the product-level strategies including geographic concentrations, innovation types, product claim, category focus and more
  • Monitoring the advertising strategies of various brands and gain insights into channel focus, regional focus, and more
  • Perform company-level analysis to understand business model, size, and geographic focus
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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