Anglo-Dutch group Unilever (LSE: ULVR) today announced it has abandoned its plan to end its dual-listed structure and relocate its headquarters to the Netherlands. The plan, which would have seen the consumer goods giant kicked out of the FTSE 100, had faced growing opposition from UK investors.
The company said in today’s announcement: “We have had an extensive period of engagement with shareholders and have received widespread support for the principle behind simplification. However, we recognise that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw.”
Where to from here?
The proposal to simplify the group’s structure was one of a number of measures the board has pursued to “accelerate delivery of value for the benefit of our shareholders,” as a direct result of a 4,000p-a-share takeover bid by Warren Buffett-backed Kraft Heinz in February last year. Share buybacks, enhanced dividends and the disposal of the group’s spreads business have been welcomed, but many UK shareholders saw little value in ‘going Dutch’.
The shares are down 1% after today’s U-turn by the board and are trading at around the 4,000p level of the Kraft Heinz bid. I rate the shares as excellent value when the forward earnings multiple is below 20 and the prospective dividend yield is above 3%. At the current share price, the multiple is 19.9 and the yield is 3.3%. As such, I rate the stock a ‘buy’.
As an aside, I note the board said today that it “continues to believe” that simplifying the group’s dual-headed structure would be in the best long-term interests of Unilever. So I’m wondering if the somewhat embarrassing climbdown could be a catalyst for boardroom change and/or renewed interest from Kraft Heinz/Warren Buffett.
Hot property
In contrast to the muted movement of Unilever’s share price today, real estate firm Intu (LSE: INTU) has rocketed over 25%. This follows after-hours news late yesterday afternoon that a consortium is considering a possible offer for the FTSE 250 company, which owns some of the UK’s biggest shopping centres, including flagship assets the Trafford Centre in Manchester and Lakeside in Essex.
The consortium is led by Intu deputy chairman John Whittaker’s Peel Group, which already owns 26% of the company. Earlier this year, Hammerson pulled out of a 253.9p-a-share bid that valued Intu at £3.4bn. Even after soaring to 190p today, the value is only £2.6bn. Having said that, Intu’s half-year results in July saw a £0.65bn downward property revaluation, resulting in a fall in adjusted net asset value (NAV) per share to 362p from 411p at 31 December.
Nevertheless, we still have Intu trading at a substantial discount to NAV and with a running dividend yield of 7.4%. As veteran retail analyst Nick Bubb said this morning: “At this level, despite the near £5bn of debt and the pressure on rental values, you’d think that buying Intu was a pretty cheap way into its two flagship assets.” On balance, due to the sheer size of the discount to NAV and dividend yield, and the potential for a bid to realise value above the current share price, I rate the stock a ‘buy’