Unilever has announced plans to go ahead with its plans to unify its legal structure and become an entirely UK-based group, despite the tax threat from Dutch authorities.
In a statement, the FMCG giant said the Boards of its UK and Dutch entities have decided to “request that the UK High Court approves the Cross-Border Merger” at a hearing on 2 November, with an aim to complete the Unification process by 29 November 2020.
Unilever said the Boards consider such a move “in the best interests” of the group and its shareholders, claiming that it will offer significant benefits by “increasing Unilever’s strategic flexibility for portfolio evolution” and “removing complexity and further strengthening Unilever’s corporate governance”.
Politicians in the Netherlands have warned of implementing a so-called ‘exit tax’ via the GroenLinks initiative bill, which was tabled in October, a move that could potentially cost Unilever up to €11bn. However, Unilever said it remains unclear “when, or indeed if at all, the bill will be enacted, or in what form”, adding that the legal advice it has received claims that any such tax “should be annulled on the grounds that it infringes the Dutch UK Tax Treaty, other Dutch tax treaties with states in which shareholders reside, primary and secondary EU law and the First Protocol to the European Convention on Human Rights.”
The unification is being led by CEO Alan Jope, and reverses a failed attempt in 2018 by his predecessor Paul Polman two years ago to unify the group as a solely Dutch entity. Unilever has said eliminating the dual-nationality nature of its operations will help simplify the process of acquisitions and disposals, adding that no jobs will be moved or lost.
NAM Implications:
- Competitors should anticipate unification.
- …and thereby improvements in relative competitive appeal..
- Despite the potential delay arising from the tax issue…
