Unilever Buys Back Preference Shares to Simplify Capital Structure

Unilever simplifying capital structure after rejecting Kraft Heinz bid
By Lisa Botter ,

Unilever NV  (UL) - Get Report  said Wednesday that it will buy back around $520 million preference shares from Dutch institutional investors in a bid to simplify its capital structure.

The Anglo-Dutch consumer goods company said Wednesday, Aug. 9, that it had agreed a deal to buy all the 6% and 7% preference shares held by insurer and asset manager NN Investment Partners and insurer ASR Netherlands, whose holdings represent 97% of these outstanding shares.

The deal will be launch a public offering for the shares, which will value all of the outstanding 6% and 7% cumulative preference shares at €450 million ($528 million). Unilever will offer €3,078.00 per 6% preference share, €307.80 per 6% sub-preference share, €3,262.00 per 7% preference share and €326.20 per 7% depository receipt of sub- preference Share.

"It will make Unilever easier to understand, and improve corporate governance by strengthening the link between economic interest and voting rights for our shareholders," Unilever said Wednesday.

The preference shares held by NN Group represent a total value of approximately €295 million and 11.4% of the voting rights in Unilever.

NN and ASR have each irrevocably committed to accept the Offer and tender the Preference Shares held by them. The offer is expected to launch in the third quarter of this year and completed in the fourth quarter.

Upon completion, Unilever intends to commence statutory proceedings to acquire any remaining outstanding preference shares and to terminate the listings on Euronext Amsterdam.

The company said it has been trying to simplify its capital structure for many years but came under pressure from shareholders earlier this year after it rejected a $143 billion takeover bid by Kraft Heinz Co. (KHC) - Get Report .

Unilever unveiled a leaner, more agile version of itself on April 6, announcing it will shed its spreads business, combine its food and refreshments business, and distribute money back to shareholders.

The Anglo-Dutch consumer goods giant will also review its dual-headed legal structure, which sees it headquartered and listed in the U.K. and Holland to see if it can be simplified. This is expected to be completed by the end of this year.

Unilever's ordinary shares were marked 0.3% lower at 4,366 pence in London in early Wednesday trading, trimming their three-month gain to around 8.6%.

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