Anglo-Dutch food and detergent maker Unilever is studying the legal unification of Royal Dutch/Shell Group with interest but has no concrete plans to follow suit, a spokesman said on Friday.
Unilever NV and Unilever Plc are stand-alone companies with separate listings and headquarters. They jointly own the group's operating companies, though they merged their management boards in May.
Oil major Shell said on Thursday it would ditch its own century-old dual-ownership system, which some investors said contributed to a reserves overbooking scandal, and move to a unified corporate structure.
"Shell announced the unification because it believed it to be in the interest of its shareholders. We are a different company and face different issues," spokesman Tom Gordijn said.
He cited the decision earlier this year to unify the boards of the British and Dutch arms of the group, with executive and non-executive directors on one board.
"We strive for the highest standards in corporate governance and the changes at Shell provide an interesting case study," he said, adding that Unilever would keep an open mind and could change its structure if needed.
But, as with Shell, some Unilever shareholders and especially US based investors would welcome a unified legal structure and a single chief executive, which they say would make the group more transparent.
"(The Shell restructuring) could prove to be a spark for Unilever, which has already been under pressure to do more to unify its management," said Paul Frentrop, founder of Dutch Corporate Governance Services, which acts on behalf of shareholders in corporate governance issues.
But tax implications could still see Unilever favouring a dual structure, said Anne Louise van Lynden van Sandenburg of Investor Voice, another such group.
"There are people out there who would prefer to see companies like Unilever and Reed Elsevier combining the Dutch and English entities, but there are a lot of other factors such as tax effects that need to be considered."
Unilever, which owns ice cream maker Ben & Jerry's and Slim.fast dieting aids, has two executive co-chairmen of the board - Antony Burgmans in Rotterdam and Patrick Cescau in London who recently succeeded Niall FitzGerald.
At 45.80 euros and 465 pence, Unilever trades at about 11 times estimated 2005 earnings per share, according to Reuters Estimates. The shares have fallen 12 percent this year. The group's valuation is lower than those of its peers, with Nestle trading at 12.7 times estimated 2005 earnings, Danone at 15 times and Procter & Gamble at 19.7 times.
"With Unilever's results under pressure there is some renewed attention on why they need two captains, and two ships," said ING analyst Robert Jan Vos.
Comments
Comments are closed.