Unilever (ULVR)

[Dod101]

Excellent although the Dutch shareholders might this time veto it? Anyway, London is a much bigger financial centre than Rotterdam and this will more or less follow the pattern of Royal Dutch Shell, where the parent company is in London. I suggested this to the previous chairman of Unilever but he was unimpressed. Wonder why?

So this will be a takeover in all but name by the UK based PLC of the Rotterdam based NV. Good although I suppose if I were Dutch I might not be too impressed. This is surely sensible.

Dod

[dealtn]

Excellent although the Dutch shareholders might this time veto it? Anyway, London is a much bigger financial centre than Rotterdam and this will more or less follow the pattern of Royal Dutch Shell, where the parent company is in London. I suggested this to the previous chairman of Unilever but he was unimpressed. Wonder why?

So this will be a takeover in all but name by the UK based PLC of the Rotterdam based NV. Good although I suppose if I were Dutch I might not be too impressed. This is surely sensible.

Dod

Interesting that "Future Unilever European bonds having their primary listing in Amsterdam" is how they announce it. Given that London is the bigger financial centre, as you put it, I read that as Eurobond issuance will be conducted out of London, and listed in Amsterdam, but I might be wrong.

[barchid]

dealtn
Nearly every bond issued in the euro market, be it eurodollar etc or in Euros have an official listing where bonds tend to trade by appointment once a day or so, but the real liquidity is OTC.
So it would be quite normal to list on the AEX, Luxembourg has probably the majority of euro listings and it is a very long list indeed !

[ADrunkenMarcus]

Excellent although the Dutch shareholders might this time veto it? Anyway, London is a much bigger financial centre than Rotterdam and this will more or less follow the pattern of Royal Dutch Shell, where the parent company is in London. I suggested this to the previous chairman of Unilever but he was unimpressed. Wonder why?

So this will be a takeover in all but name by the UK based PLC of the Rotterdam based NV. Good although I suppose if I were Dutch I might not be too impressed. This is surely sensible.

Dod

I think Rutte has a political alibi in that the parliament did not pass the dividend tax cut he championed, which was a concern many UK shareholders had.

Does the UK levy a withholding tax on dividends for overseas holders of UK shares? If not, the Dutch shareholders might be more amenable

Best wishes

Mark.

[PinkDalek]

[Does the UK levy a withholding tax on dividends for overseas holders of UK shares?

Not sure if that was rhetorical but the answer is no, the UK does not operate a withholding tax system (and never did).

[Dod101]

The announcement specifically says that there will be no with holding tax on dividends for foreign holders of UK shares, although I see that PD has answered this already.

The Dutch vote also needs only a simple majority but our law for a Scheme of Arrangement (which is how the previous proposals were being implemented) requires a 75% majority which was a significant hurdle. Graeme Pitkethly must be feeling a little uncomfortable because he should have known the risks with the UK vote last time (he is Scottish) and yet like the now gone Chairman and CEO he was actively promoting the previous deal.

Dod

[dealtn]

dealtn
Nearly every bond issued in the euro market, be it eurodollar etc or in Euros have an official listing where bonds tend to trade by appointment once a day or so, but the real liquidity is OTC.
So it would be quite normal to list on the AEX, Luxembourg has probably the majority of euro listings and it is a very long list indeed !

Maybe I wasn't clear, in which case I apologise. I worked in the City for nearly 25 years, a good proportion of which was in the Bond market.

What was interesting was the way they describe the Euro bonds. It makes it sound like the equity is listed in London but the Bonds are listed in Amsterdam, and the unsaid bit "so we are treating the UK and the Europe bits of the company equally, so no need for "Europe" to feel they have missed out".

In practice Euro bond listing is unimportant, and that what hasn't been said is that in all likelihood London will be the origination, issuance, and trading part of the company's bonds.

[barchid]

dealtn
Sorry, I did misunderstand what you were saying.
Yes, if that is the reason they stated that I guess it is a bit of window dressing, as you imply, to help make this deal acceptable to the Dutch.

[ADrunkenMarcus]

dealtn
Sorry, I did misunderstand what you were saying.
Yes, if that is the reason they stated that I guess it is a bit of window dressing, as you imply, to help make this deal acceptable to the Dutch.

I do wonder if such a demerger is on the cards in the next decade or so. It does generate cash and if they can deploy the cash from slower growing divisions into faster growing ones at a high rate of return then I am happy.

Best wishes

Mark

[ADrunkenMarcus]

the UK does not operate a withholding tax system (and never did).

Thanks.

On Dod's point, I should have re-read the announcement first!

Best wishes

Mark.

[dealtn]

dealtn
Sorry, I did misunderstand what you were saying.
Yes, if that is the reason they stated that I guess it is a bit of window dressing, as you imply, to help make this deal acceptable to the Dutch.

I do wonder if such a demerger is on the cards in the next decade or so. It does generate cash and if they can deploy the cash from slower growing divisions into faster growing ones at a high rate of return then I am happy.

Best wishes

Mark

What potential demerger?

[Alaric]

What potential demerger?

I think I saw in their reasoning for changing their structure that it would make spinning off a whole division somewhat easier, presumably because they would only need one set of shareholder approvals.

[dealtn]

What potential demerger?

I think I saw in their reasoning for changing their structure that it would make spinning off a whole division somewhat easier, presumably because they would only need one set of shareholder approvals.

Maybe I wasn't clear. What parts do you, or anyone, think likely to be spun off?

[Alaric]

[ What parts do you, or anyone, think likely to be spun off?

I though I read a reference to tea somewhere in their announcement.

[Wizard]

What potential demerger?

I think I saw in their reasoning for changing their structure that it would make spinning off a whole division somewhat easier, presumably because they would only need one set of shareholder approvals.

Maybe I wasn't clear. What parts do you, or anyone, think likely to be spun off?

I believe there was specific reference to the Tea business.

[dealtn]

I think I saw in their reasoning for changing their structure that it would make spinning off a whole division somewhat easier, presumably because they would only need one set of shareholder approvals.

Maybe I wasn't clear. What parts do you, or anyone, think likely to be spun off?

I believe there was specific reference to the Tea business.

Yes I think Tea is likely to be sold off, and that is possibly made easier by changing the structure potentially to a single seller. I don't know enough about it to see what the practical difficulties are that this might overcome.

Unilever is in the difficult situation of promoting the business as a growing one with a great future, to attract the appropriate price, but at the same time saying it isn't growth enough to be a core part of its Food business. It's been there before, and is potentially dealing with its peer group who all understand both the specific business but the dynamics of selling and buying brands.

Unilever's Tea business is predominantly a "Black Tea" business which has suffered due to two trends, neither of which appear to be likely to reverse. Firstly there has been a general trend away from "Black" to green/herbal/flavoured. Secondly within "Black" the trend has ben away from "premium" towards a more commoditised and generic product, such as supermarket own-brand.

Unilever owns PG Tips, Lyons and Lipton, which are strong brands in themselves, but it is Twinings and others that are growing. Unilever has to make the decision on whether to invest and upscale a broader Tea (and other confections) business, buying other brands and reaping synergies, or divesting to other groups better placed to benefit from that same consolidation.

I suspect the business review will lead to divestment, and a price of £5-8bn achieved, but that presumes a "normality" in business that might be some way off yet. I don't imagine they are in any particular hurry, and would rather a cash buyer. That would be easier from a buyers perspective to occur with stock markets generally higher.

The more important question, from Unilever investor's perspective is what do they do with that cash? What businesses do they want to grow, they see can have a higher ROCE than the Tea one, and will that be by brand acquisition, or not?

[Gengulphus]

[Does the UK levy a withholding tax on dividends for overseas holders of UK shares?

Not sure if that was rhetorical but the answer is no, the UK does not operate a withholding tax system (and never did).

On a somewhat pedantic point of detail, that's a bit too all-encompassing: the UK does not operate a withholding tax system on dividends, but it does operate a withholding tax system. It's on the PIDs paid by REITs, which are similar to dividends in most ways and often referred to as dividends, but are not actually dividends. So I'm making this point not because of any relevance to Unilever, but just as a warning against applying the "there's no UK withholding tax system" idea too broadly to other shares.

Gengulphus

[PinkDalek]

[Does the UK levy a withholding tax on dividends for overseas holders of UK shares?

Not sure if that was rhetorical but the answer is no, the UK does not operate a withholding tax system (and never did).

On a somewhat pedantic point of detail, that's a bit too all-encompassing: the UK does not operate a withholding tax system on dividends, but it does operate a withholding tax system. It's on the PIDs paid by REITs, which are similar to dividends in most ways and often referred to as dividends, but are not actually dividends. So I'm making this point not because of any relevance to Unilever, but just as a warning against applying the "there's no UK withholding tax system" idea too broadly to other shares.

Equally pedantically, I've seen those such as British Land describe the tax deduction as a withholding tax but have yet to find such a description in the legislation.

In fact, according to https://www.gov.uk/hmrc-internal-manual ... greit08005, the term property income distributions is not in the legislation.

That page also states The distributions that are paid out of the tax-exempt profits are payable under deduction of income tax at the basic rate. No mention of a withholding tax system that I can see.

Maybe I'm being too pedantic.

[PinkDalek]

Merely to add (I should have searched earlier using withholding tax) this random link https://www.gov.uk/hmrc-internal-manuals/international-manual/intm413210 from the HMRC Manual includes the following sentence:

Unlike a number of regimes, the UK has no “withholding tax” as such;

Yes, Income Tax is withheld in a number of situations (which is outside the scope of Unilever news).

[ADrunkenMarcus]

The more important question, from Unilever investor's perspective is what do they do with that cash? What businesses do they want to grow, they see can have a higher ROCE than the Tea one, and will that be by brand acquisition, or not?

Precisely.

Best wishes

Mark.