11th Jun 2020 08:13
(Alliance News) - Unilever said Thursday it plans to unify its group legal structure under a single UK parent company, Unilever PLC, to create a "simpler" firm.
The move revisits in reverse a plan by Unilever in 2018 to simplify under a Dutch entity and move its headquarters to Rotterdam from London. That plan was withdrawn after opposition from UK shareholders, as it would have meant the stock dropping out of the FTSE 100 index.
"Unilever remains committed to its strategy of long-term growth across all three divisions and last year began a full evaluation of its current categories and brands, with a view to accelerating the pace of portfolio change. This review has underlined how a simpler legal structure would give Unilever greater strategic flexibility to grow shareholder value, providing a catalyst for accelerated portfolio evolution and greater organisational autonomy," the consumer goods firm said on Thursday.
The unification will be implemented through a cross-border merger between Unilever PLC and Unilever NV. Unilever NV shareholders will receive one new Unilever PLC share in exchange for each Unilever NV share.
Following the move to a single parent legal structure, Unilever's "strong presence" in both the Netherlands and the UK will remain unchanged, the Marmite maker stressed.
Addressing the political sensitivities of its decision to pick the UK over the Netherlands this time, Unilever said: "Agri-foods is an important sector in The Netherlands. With the flexibility that unification provides, the Dutch government has also asked for reassurance that if Unilever should ever choose to list the Foods & Refreshment Division as an independent company, it would be incorporated and listed in The Netherlands.
"The Netherlands is an attractive headquarter location for business and provided it continues to be as such, Unilever is comfortable to make these commitments given the Division's already strong Dutch presence."
Unilever PLC shares were up 1.3% in London early Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 2.4% at 6,177.35
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Hang Seng: down 2.0% at 24,562.10
Nikkei 225: closed down 2.8% at 22,472.91
DJIA: closed down 282.31 points, 1.0%, at 26,989.99
S&P 500: closed down 0.5% at 3,190.14
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GBP: down at USD1.2676 (USD1.2760)
EUR: firm at USD1.1355 (USD1.1343)
Gold: up at USD1,732.39 per ounce (USD1,716.28)
Oil (Brent): soft at USD40.50 a barrel (USD40.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 BST Ireland consumer price index
0830 EDT US producer price index
0830 EDT US weekly initial jobless claims
1030 EDT US EIA weekly natural gas storage report
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The Federal Reserve projected a solid rebound for the US economy next year amid optimism that the worst of the coronavirus pandemic's disruptions has passed. Fed Chair Jerome Powell however cautioned that the outlook remains highly uncertain, and both the central bank and Congress may have to do more to boost the recovery. At the conclusion of its two-day meeting, the Fed's policy-setting Federal Open Markets Committee confirmed it will keep the benchmark interest rate at zero until the recovery is underway. The Fed also released economic projections of FOMC members for the first time since December. Their median forecast is for the economy to contract by 6.5% this year, with unemployment falling to 9.3% by the end of the year from its current 13%.
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UK Prime Minister Boris Johnson is considering reducing the two-metre social-distancing restriction to allow schools in England to reopen fully by September. The newspaper reported Johnson is looking at following World Health Organisation advice and cutting the distance people should remain apart from two metres to one – guidance already followed by countries including France, Denmark and Singapore. At Prime Minister's Questions on Wednesday, he promised to "keep that two-metre rule under constant review". As well as helping to make it easier for schools to open, slashing the social distancing restriction could help pubs and restaurants to start-up again, with Business Secretary Alok Sharma this week accepting that "for economic reasons, businesses will want to take a look at this two-metre rule".
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Plans by UK companies to invest in their business and recruit new staff have "plumbed new depths" amid continuing damage to the economy caused by the Covid-19 crisis, new research suggests. A survey by the Institute of Directors suggested that company directors' confidence improved slightly in May, from a record low the month before. But investment and hiring intentions for the next year have fallen to record lows, and most firms believe their revenue will be lower in the year ahead, while wages are also expected to fall, said the IoD.
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Eurogroup finance ministers are due to grapple with the economic consequences of the coronavirus pandemic again on Thursday. The 19 finance ministers of the countries that use the euro are examining the effects on Cyprus, Spain and Greece, which were saved years ago during the financial crisis, and which now have to cope with a setback due to the pandemic. The eurozone countries also want to discuss the current gloomy economic forecasts and plans for the economic recovery after the pandemic together with the other EU partners.
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BROKER RATING CHANGES
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JPMORGAN RAISES JUST EAT TAKEAWAY.COM PRICE TARGET TO 10,155 (9,847) PENCE - 'OVERWEIGHT'
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BARCLAYS RAISES LANCASHIRE TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 900 (669) PENCE
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COMPANIES - FTSE 100
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Anglo-Dutch meal delivery firm Just Eat Takeaway.com agreed to acquire US peer Grubhub for USD7.3 billion to form the world's largest online food delivery company outside of China. The deal comes only months after the merger of Just Eat and Takeaway.com was completed and as food delivery companies have experienced strong growth in the wake of the coronavirus pandemic from customers stuck at home who have boosted digital orders. The combined company will have a major presence in four key markets – the US, the UK, Germany and the Netherlands – and position the enterprise for greater growth in the US, they said in a news release. Grubhub has been effective in navigating the "fragmented" US market – but "the US remains an underpenetrated market" that is "nowhere near its end-state", the companies said. Grubhub had held talks previously with ride-hailing giant Uber, but the discussions fell apart over price after Uber proposed USD6 billion, a banking source told AFP recently. Under the Just Eat Takeaway.com deal, which must be approved by shareholders of both companies, investors in Grubhub will receive 0.6710 of Just Eat Takeaway shares for each Grubhub share. That values Grubhub at USD75.15 a share, compared with a closing price Wednesday of USD59.05.
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Ocado said it has raised GBP657 million via a share placing and retail offer. Concurrently with the fundraise, the online grocer said it has priced an offering of GBP350 million in guaranteed senior unsecured convertible bonds due 2027. Altogether, this represents a total raise of GBP1.01 billion. In announcing the fundraising plan late Wednesday, Ocado had said the fundraising offers it "financial flexibility to capitalise on opportunities arising from the significant acceleration in online adoption and grow faster over the medium term".
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Specialist chemicals firm Johnson Matthey reported a fall in annual profit as it took a GBP60 million hit from Covid-19. Revenue rose 36% in the year to March 31 to GBP14.58 billion, but pretax profit fell 38% to GBP305 million. Profit was dented by a restructuring and impairment charge of GBP140 million and a GBP60 million impact related to Covid-19. Of the Covid-19 hit, around GBP30 million reflected lower demand in Clean Air and the remainder was due to higher trade debtor provisions across the group and delayed sales due to logistical challenges in its other businesses. In light of current uncertainty, Johnson Matthey proposed a final dividend of 31.125 pence, half the level of the year before. This took the total dividend for the financial year to 55.625p, down 35% from 85.5p the year prior. The company added it plans to cut around 2,500 jobs as part of plans to save an additional GBP80 million in costs by the end of the 2023 financial year.
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COMPANIES - MAIN MARKET AND AIM
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Online trading provider CMC Markets reported a dramatic surge in annual profit, and said momentum has continued into its new financial year. Total revenue in the year to March 31 rose 80% to GBP298.1 million from GBP166.0 million the year before, with pretax profit surging to GBP98.7 million from just GBP6.3 million. Contract for difference net trading revenue jumped 95% to GBP214.5 million with revenue per active client up 81% to GBP3,750. On the back of the strong results, CMC boosted its dividend to 15.0 pence from just 2.0p the year before, saying this was in line with its policy of paying out 50% of post-tax profit. CMC noted it has taken no government support during the Covid-19 crisis. Momentum has continued, with CMC saying CFD gross client income at the start of the new financial year has been "around double" that during the same period a year before with client income retention remaining strong. "The heightened volatility and trading activity resulting from Covid-19 has continued into the first quarter of the financial year, and CMC continue to provide clients with market leading trading platforms and client service. I am also confident that, once the financial world returns to more normal conditions, the Group will continue to build on the underlying growth that was being displayed prior to the pandemic. This, in combination with our stable dividend policy and positive trading outlook, will enable CMC to continue to deliver considerable value to all of our stakeholders," said Chief Executive Peter Cruddas.
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Thursday's Shareholder Meetings
WM Morrison Supermarkets
Coats Group
Dignity
Xeros Technology Group
Corero Network Security
NB Global Floating Rate Income Fund
Alfa Financial Software
Bacanora Lithium
Sopheon
Parity Group
Churchill China
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By Tom Waite; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
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