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European Investors-VEB requests clarification from Unilever about the decision to complete the unification

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Investor representative European Investors-VEB asks Unilever to clarify the decision to complete the unification of the former British-Dutch group on 30 November 2020.

In previous communication, Unilever had indicated that the Exit Tax bill by GroenLinks MP Bart Snels could jeopardise the unification. In the prospectus, the possible additional tax assessment of 11 billion euros was assessed as would not be in the best interests of Unilever, its shareholders and other stakeholders as a whole.

As a result, Unilever shareholders were led to believe that the unification would not continue or be completed if the introduction of the Exit Tax was still appropriate. The bill has not yet been withdrawn or amended in such a way that the consequences for shareholders may turn out differently than with an additional tax of 11 billion euros in dividend tax. Such an additional tax will be borne by the holders of the former Dutch shares in the remaining English entity. In anticipation of such a negative scenario for investors, those stocks were “earmarked” on Monday’s listing.

Explanation and clarification necessary
In the opinion of European Investors-VEB, the information and clarification towards investors has been insufficient. In the weeks before November 30, 2020, Unilever failed to provide investors with insight into its considerations whether to continue with the unification. Why did the boards consider it in the best interest of Unilever, its shareholders and other stakeholders to complete the unification at this time? Against the background of the statement in the prospectus, this seems premature and counterintuitive, as it may not prove to be in the best interests of Unilever, its shareholders and other stakeholders.

Impact Brexit
In addition, the question arises whether the implications of a foreseeable Brexit have been properly weighed up. The unification is most likely irreversible after Brexit due to the changing legal rules for cross-border corporate restructuring in the United Kingdom. In that light, suspending or reversing unification might have been better than persisting in finalising that unification.

Hearing of the House of Representatives
During the hearing about the bill in the House of Representatives, coincidentally on the same day as the listing of Unilever Plc on Euronext Amsterdam, one speaker stated that Unilever’s return to the Netherlands would also be possible after a Brexit. However, several lawyers have indicated that a real corporate seat transfer will be legally difficult after a Brexit and will certainly have tax implications. European Investors-VEB expects that the Unilever boards have also considered this route and ask for further explanation of their decision. 

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