Unilever scrapped plans to move its headquarters to the Netherlands on Friday in the face of a British shareholder revolt, keeping one of the country's most valuable companies in London ahead of Brexit.
The climbdown comes three weeks ahead of a vote on the plan and is a significant victory for UK shareholders big and small who opposed the move, which would have kicked the maker of Dove soap and Ben & Jerry's ice cream out of the benchmark FTSE 100 index .
"We are pleased they have abandoned the plan to 'go Dutch'," said GAM portfolio manager Ali Miremadi, who was planning to vote against the move. "Now the company can put its focus into the core job - driving long-term shareholder value."
Shareholders representing about 12 percent of Unilever had publicly opposed the move, concerned about the effective forced selling of their shares with no premium, uncertainty around the future tax treatment of Dutch dividends and a perception that the move was partly aimed at securing greater takeover protection under Dutch law.
Unilever decided to collapse its Anglo-Dutch structure following a deep business review sparked by last year's failed $143 billion takeover approach by Kraft-Heinz. The stated aim was to make it more efficient and agile in a consumer market that is changing fast.
But on Friday Unilever said it recognised that the proposal had not received support from a significant group of shareholders and therefore it was appropriate to withdraw it. "The board will now consider its next steps and will continue to engage with our shareholders," Chairman Marijn Dekkers said. He added that the company will proceed with the plan to cancel its Dutch preference shares.
Earlier this week, influential proxy advisory firm PIRC recommended shareholders vote against the move. "This change should not really affect the group's near-term operation, although it may lead to a faster pace for CEO succession planning," Liberum analyst Robert Waldschmidt said.
Unilever's London-listed shares were up 0.8 percent in morning trade, though its Dutch shares were flat. Waldschmidt said the bigger drivers for Unilever's shares were US interest rates and continued difficulties in emerging markets, particularly related to their currencies.