Unilever’s botched retreat from London leaves it more open to hostile bids

Unilever’s abandonment of plans to scrap its Anglo-Dutch corporate structure and leave London is a huge embarrassment for chief executive Paul Polman, whose days in post must surely be numbered. More significantly, it’s a rare demonstration of the power of UK institutional investors (the likes of Aviva, Legal & General, M&G and Schroders) to exercise collective influence in errant boardrooms.

The institutions were unpersuaded that the proposed new Dutch-based structure would generate greater value for them from the Persil-to-Marmite conglomerate — and many disliked the idea that Unilever would drop out of the FTSE 100 index, obliging tracker funds to sell their holdings. Polman’s plan was painted by the media as a response to Brexit, but in fact had much more to do with last year’s $143 billion bid approach from the US consumer giant Kraft Heinz — which was swiftly withdrawn, but which nevertheless pushed Polman into short-term shareholder-pleasing measures, including a share buyback and a dividend increase, that he later said he regretted.