Unilever Not Leaving London, A Relief for Money Managers?

Unilever, a name that needs no introduction in the world of the consumer goods, has decided to pass the idea of leaving London. In March 2018, the company made an announcement that it would be shutting down the London headquarters and thus making the Netherlands the one and only headquarters of the company. The company stated that their decision to leave the continent was not at all related to the Brexit. If the company had decided to go further on their plan to leave London, that could have impacted the money managers. How? Shutting down of operations in London would mean that the company would not be traded on FTSE 100 stock index. This means that all the money managers which have already invested in the company or have substantial exposure would have to unload their holdings.

This could be one of the reasons that the company has experienced criticism from the giant money managers like M&G Investments as well as Legal & General Investment Management. However, the management of the company stated that the primary for abandoning the plan is the lack of the shareholders’ support. The company added that “a significant group of shareholders” have not supported the decision of leaving London and thus, they need to drop the plan. The management of the company also stated that the move to leave London was right this could improve the future growth prospects of the company. The large shareholders of Unilever are of the view that they will be voting against the Unilever’s idea to collapse. This could also act a weapon for BHP Billiton as the company is in disagreement with Elliott to go for the idea of being a simplified company limited to Australia.

The top management of Unilever stated that the successful execution of leaving London would mean making the complex structure a simplified one. As a result of the simplification, the company might be able to generate significant value and would help the company is experiencing the long-term growth.[optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

BHP Billiton Limited (ASX:BHP) is also being pressurized to adopt a similar step as that of Unilever i.e. to leave the continent and remain within the Australian boundaries. Investor, Elliott, has been pressurizing the company to collapse the twin structure. The simplification of BHP into an Australian listed company would be accounting a significant portion of the Australian index. BHP worries more about the risks as well as expenses that it might encounter as a result of the decision of limiting its position to the Australian borders. Moreover, no consensus has been seen regarding the view that making the company more simplified would attract sufficient value.

On October 8, 2018, BHP Billiton’ shares traded at A$34.500 which implies an intra-day fall of 2.817%. The company has a market capitalization of $114.02 billion. The company’s stock price is trading in the higher range.

On September 28, 2018, BHP came out with the press release that it has completed the unloading of Fayetteville Onshore US gas assets. This sale has been made to Merit Energy Company’s subsidiary. BHP Billiton Petroleum (Arkansas) Inc.’s 100% of the issued share capital got acquired by Merit. The latter also acquired BHP Billiton Petroleum (Fayetteville) LLC’s 100% membership interests. The consideration which has advanced by the acquirer amounted to US$0.3 billion.

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