(Alliance News) - Unilever PLC may have to scrap unification plans if a Dutch tax proposal goes ahead, to avoid the resulting EUR11 billion exit tax charge, it said in its prospectus for the corporate reorganisation on Monday.
The private member's bill was introduced by a member of the Dutch House of Representatives for GroenLinks, a Dutch opposition party. According to Anglo-Dutch consumer goods giant Unilever, enacting the bill in its present form - should it apply to unification - could result in a hefty EUR11 billion charge.
Unilever is intending to unite the company's legal structure under a single parent company, Unilever PLC, a move set to complete over the weekend of November 21 and 22.
However, Unilever's prospectus said: "Proceeding with unification, if it resulted in an exit tax charge of some EUR11 billion, would not be in the best interests of Unilever, its shareholders and other stakeholders as a whole."
Unilever said it could opt to abandon its unification proposal "at any time up to the UK High Court hearing to approve the cross-border merger or, subject to the approval of the UK High Court, the CBM effective date."
The warning in Unilever's prospectus was first reported by the Telegraph newspaper late Monday.
If the proposed tax were to scupper plans, this would be the second failed unification attempt for Unilever.
The company in June announced plans to consolidate its legal structure into a single parent company, two years after being prevented from becoming a solely Dutch entity by dissenting UK shareholders.
Back in October 2018, Unilever withdrew a proposal to simplify under a Dutch entity and move its headquarters to Rotterdam from London, after the plan drew opposition from its UK shareholders. The stock would have dropped out of the FTSE 100 index, forcing index funds to sell.
This time, Unilever is intending to undertake a cross-border merger between Unilever PLC and Unilever NV. Under the merger, Unilever NV shareholders will receive one new Unilever PLC share in exchange for each Unilever NV share held. The company will remain listed in London, Amsterdam, and New York.
By Anna Farley; annafarley@alliancenews.com
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