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Unilever 'Must Not Go Down 'Slash And Burn Route'

Monday, March 20, 2017

 

Union pens letter amid fears botched Kraft Heinz takeover will scare directors into abandoning workers’ rights.

GMB, the union for food workers, has written to Unilever investors urging them to stop the company embarking on drastic cost cutting measures.

Unilever, which has a reputation for providing decent working conditions for staff, fought off a £115 billion bid [1], which was driven by private equity investor ‘sharks’ 3G Capital.

The company has a proven track record of investment, decent pensions, good working conditions and recognising trade unions like GMB.

Just last week CEO Paul Polman suggested that stakeholders like employees should also be considered when a UK "champion" is the subject of a proposed takeover.

Richard Buxton, chief executive of Old Mutual Global Investors, offered support to Polman in a letter to the Sunday Times, urging him not to “succumb to the pressures of short-termism” [2]

Following the attempted takeover, Unilever hqad released an opaque message to the press citing the need for “a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders”.

The GMB letter, sent out to the top 10 institutional investors – including BlackRock Investment Management and Legal & General Investment Management – reads [3]:

 “We are concerned that the ‘value’ sought by Unilever will rely on initiatives such as job cuts, reduced working conditions and pension ‘reforms’ that negatively impact on UK workers, their communities and are ultimately counter-productive.

“Equally ‘spinning off’ its food division or some sub-set would be likely to have a similar impact as experience shows us that incoming management teams frequently achieve efficiencies through cuts, not dynamic new management techniques.

“GMB believes that Unilever’s long-term success and prestige of its ‘brand’ has been inextricably linked to its status as a model employer and business and GMB would not wish to see that undermined, as witnessed at other UK employers such as Arcadia/BHS, Cadburys and Sports Direct.

Eamon O’Hearn, GMB National Officer, said:

“Unilever has a proud history of treating workers with respect.

“We don’t want that to change just because of a botched takeover by Kraft Heinz. Indeed just last week CEO Paul Polman suggested stakeholders like employees should also be considered when a UK "champion" is the subject of a proposed takeover.

“GMB members are worried the company will adopt a slash and burn approach in a ill-judged and short-sighted attempt to boost profits just to appease the market.

“We have written to investors urging them to make sure these fears are not realised.”

ENDS

Contact: GMB press office on 07958 156846 or press.office@gmb.org.uk

NOTES TO EDITORS

[1] Kraft Heinz withdraws Unilever takeover bid (February 19 2017)

US food giant pulls out of merger talks in a surprise turn of events with both companies jointly announcing ‘no deal’. Read more: https://www.theguardian.com/business/2017/feb/19/kraft-heinz-unilever-shareholders-lobbies-uk-government-takeoverbid

[2] Unilever at a crossroads . . . an open letter to Paul Polman (19 March 2017) http://www.thetimes.co.uk/article/unilever-at-a-crossroads-an-open-letter-to-paulpolman-rjwmhk363

[3] GMB letter recipients:

  • BlackRock Investment Management (UK) Ltd.
  • Legal & General Investment Management Ltd
  • The Vanguard Group, Inc.
  • Norges Bank Investment Management
  • BlackRock Advisors (UK) Ltd.
  • Morgan Stanley Investment Management Ltd.
  • Lindsell Train Ltd.
  • Threadneedle Asset Management Ltd.
  • Mondrian Investment Partners Ltd.
  • First State Investment Management (UK) Ltd.

 

 

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