European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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<p>With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.</p>
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<p>The discounts to NAV of Industrivärden and Kinnevik have considerably tightened. It is time to unwind them, and wait for the discounts to widen before setting up the trades again.</p>
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<p>The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a month as a result of the share unification.</p>
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With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.


The discounts to NAV of Industrivärden and Kinnevik have considerably tightened. It is time to unwind them, and wait for the discounts to widen before setting up the trades again.


The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a month as a result of the share unification.


Selected European Holdcos and DLCs: October Report

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>On 11 June, Unilever announced that it was looking to unify its group legal structure under a single parent company, <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a>, "creating a simpler company with greater strategic flexibility, that is better positioned for future success".</p><p>The Dutch shareholders approved the unification on 21 September with 99.39% of the shares voted in favour, while the UK shareholders approved the proposal on 12 October with over 99% of the shares voted in favour.</p><p>There is still one potential hurdle to the unification in the Departure Tax (GroenLinks initiative bill) being proposed by the GreenLeft Party in the Netherlands that could cost Unilever up to €11bn if it left the Netherlands.</p><p>If the unification does go through, there will be an impact of passive fund activity on <a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a>, but the bigger impact will be on <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a>. We estimate the net impact of the unification will see around US$3bn of passive money flow into the stock.</p><p>In this Insight, we take a look at some of the details around the unification before jumping into the impact on the stocks and the possible spread between the two lines prior to unification.</p>

On 11 June, Unilever announced that it was looking to unify its group legal structure under a single parent company, Unilever PLC (ULVR LN), "creating a simpler company with greater strategic flexibility, that is better positioned for future success".The Dutch shareholders approved the unification on 21 September with 99.39% of the shares voted in favour, while the UK shareholders approved the proposal on 12 October with over 99% of the shares voted in favour.There is still one potential hurdle to the unification in the Departure Tax (GroenLinks initiative bill) being proposed by the GreenLeft Party in the Netherlands that could cost Unilever up to €11bn if it left the Netherlands.If the unification does go through, there will be an impact of passive fund activity on Unilever NV (UNA NA), but the bigger impact will be on Unilever PLC (ULVR LN). We estimate the net impact of the unification will see around US$3bn of passive money flow into the stock.In this Insight, we take a look at some of the details around the unification before jumping into the impact on the stocks and the possible spread between the two lines prior to unification.

<p>Shareholders end dual structure after 90 years. The mass consumer products giant will be unified at the end of November into a single company that will be based in London.The goal is to simplify the structure and streamline corporate decision making.</p>
<ul>
<li>Shareholders of London listed <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a> approved yesterday with more than 99% of the votes to end the dual structure, with headquarters in the United Kingdom and the Netherlands, which the company has had for the last 90 years.</li>
<li>Shareholders of the Dutch listed <a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a> approved the decision last month with more than 99% of the votes. </li>
</ul>
<p><strong>Unification is expected to become effective on 29 November 2020</strong>, with dealings in new Unilever PLC shares (including new Unilever PLC Shares represented by ADS) commencing on 30 November 2020.</p>
<ul>
<li>Unilever PLC shares will continue to be included in the FTSE 100 (with a higher weighting).</li>
<li>following the listing of Unilever PLC shares on Euronext Amsterdam, the shares will also be included in the AEX Index, as well as the STOXX Europe 600 index (and other relevant pan-European indices).</li>
</ul>
<p><a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a> shares closed yesterday at a discount of 1.48% to Unilever Plc., below the 10-year average, which is a discount of 0.27%. <strong>The discount should close as a result of the merger</strong>. The trade is LONG <a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a> / SHORT <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a> . (Please note there is currency risk, which can be hedged).</p>

Shareholders end dual structure after 90 years. The mass consumer products giant will be unified at the end of November into a single company that will be based in London.The goal is to simplify the structure and streamline corporate decision making.

Shareholders of London listed Unilever PLC (ULVR LN) approved yesterday with more than 99% of the votes to end the dual structure, with headquarters in the United Kingdom and the Netherlands, which the company has had for the last 90 years.
Shareholders of the Dutch listed Unilever NV (UNA NA) approved the decision last month with more than 99% of the votes. 

Unification is expected to become effective on 29 November 2020, with dealings in new Unilever PLC shares (including new Unilever PLC Shares represented by ADS) commencing on 30 November 2020.

Unilever PLC shares will continue to be included in the FTSE 100 (with a higher weighting).
following the listing of Unilever PLC shares on Euronext Amsterdam, the shares will also be included in the AEX Index, as well as the STOXX Europe 600 index (and other relevant pan-European indices).

Unilever NV (UNA NA) shares closed yesterday at a discount of 1.48% to Unilever Plc., below the 10-year average, which is a discount of 0.27%. The discount should close as a result of the merger. The trade is LONG Unilever NV (UNA NA) / SHORT Unilever PLC (ULVR LN) . (Please note there is currency risk, which can be hedged).

Unilever's DLC Unwinding: Shareholder Approval, Timetable, Listing Considerations.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Blue Moon Group Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. </p></div><div><p>BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19. </p></div><div>
<p>In our earlier insights:</p>
<ul>
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<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-positives-dominant-market-share-strong-online-sales" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales</a>, I spoke about the positive aspects of the deal.</li>
<li>In <a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-negatives-flagging-offline-sales-not-really-a-primary-raising" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising</a>, I spoke about the not so flattering aspects of the deal</li>
<li>While my colleague, <a href="https://www.smartkarma.com/profiles/ming-lu" target="_blank" data-smartkarma-citation="accounts:2496" rel="noopener">Ming Lu, </a>commented on the offline presence in <a href="https://www.smartkarma.com/insights/blue-moon-no-1-but-no-exclusive-advantage-observation-on-the-ground" target="_blank" rel="noopener">Blue Moon: No. 1 but no exclusive advantage, observation on the ground.</a>
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</ul>
</div><div><p>In this insight, I'll talk about how the company compares with some of its listed peers.</p></div>

Blue Moon Group Holdings (BMG HK) (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19. 
In our earlier insights:


Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales, I spoke about the positive aspects of the deal.
In Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising, I spoke about the not so flattering aspects of the deal
While my colleague, Ming Lu, commented on the offline presence in Blue Moon: No. 1 but no exclusive advantage, observation on the ground.


In this insight, I'll talk about how the company compares with some of its listed peers.

Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<p>Back on the 11 June, <a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a> / <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a> <a href="https://www.unilever.com/news/press-releases/2020/unification-of-unilever-legal-structure.html" target="_blank" rel="noopener">announced</a> it will (finally) unify its dual Anglo-Dutch corporate structure under a single parent company based in London, in an about-face to the 2018 unification attempt with a Dutch-headquartered holding company.</p>
<p>The dual-headed legal structure, a relic from 1930, has proven to be a disadvantage in equity-based acquisition and disposals; and more recently, with respect to the review and potential spin-off of its tea business.</p>
<p>The unification was touched on by <a href="https://www.smartkarma.com/profiles/jesus-rodriguez-aguilar" target="_blank" data-smartkarma-citation="accounts:5842" rel="noopener">Jesus Rodriguez Aguilar</a> in <em><a href="https://skr.ma/2ZkKU" target="_blank" rel="noopener">Unilever's DLC Structure</a></em>. </p>
<p>As announced on the <a href="https://www.unilever.com/Images/announcement-launch-and-publication-of-public-documents_tcm244-553882_en.pdf" target="_blank" rel="noopener">10 August</a>, the Unilever NV extraordinary general meeting will take place on 21 September 2020. The Unilever PLC shareholder meetings will be held on 12 October 2020.</p>
<p>It is worthwhile digging a little deeper into this structure, as to whether this unification will renew focus on other DLC structures such as <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">Bhp Billiton (BHP AU)</a>.</p>
<p>As always, more below the fold.</p>

Back on the 11 June, Unilever NV (UNA NA) / Unilever PLC (ULVR LN) announced it will (finally) unify its dual Anglo-Dutch corporate structure under a single parent company based in London, in an about-face to the 2018 unification attempt with a Dutch-headquartered holding company.
The dual-headed legal structure, a relic from 1930, has proven to be a disadvantage in equity-based acquisition and disposals; and more recently, with respect to the review and potential spin-off of its tea business.
The unification was touched on by Jesus Rodriguez Aguilar in Unilever's DLC Structure. 
As announced on the 10 August, the Unilever NV extraordinary general meeting will take place on 21 September 2020. The Unilever PLC shareholder meetings will be held on 12 October 2020.
It is worthwhile digging a little deeper into this structure, as to whether this unification will renew focus on other DLC structures such as Bhp Billiton (BHP AU).
As always, more below the fold.

Unilever: When Two Heads Are Not Better Than One. What About BHP's DLC?

United Kingdom

Unilever PLC manufactures personal care products. The Company offers consumer goods, food, detergents, fragrances, beauty, home, and personal care products. Unilever serves customers worldwide.

Reckitt Benckiser Group PLC manufactures and distributes a wide range of household, toiletry, health, and food products on a global basis. The Company's products include fabric treatments, disinfectant spray and cleaners, dishwashing detergent, personal care, food, and over the counter drugs.

PZ Cussons plc is a holding company.  Through its subsidiaries, the Company manufactures soaps, detergents, toiletries, pharmaceuticals, refrigerators, and air conditioners.  PZ Cussons also sells and merchandises its products in the United Kingdom, Greece, Africa, Australia, Indonesia, and Thailand.

Diageo plc produces, distills and markets alcoholic beverages.  The Company offers a wide range of branded beverages, including vodkas, whiskeys, tequilas, gins, and beer.

Associated British Foods PLC is a diversified international food, ingredients, and retail group. The Group conducts business in China, South America, Africa Europe, Australia, New Zealand, Asia, and the United States.

British American Tobacco P.L.C. operates as a holding company for a group of companies that manufactures, markets, and sells cigarettes and other tobacco products including cigars and roll-your-own tobacco.

Imperial Brands PLC operates as a consumer goods company. The Company manufactures, markets, and sells cigarettes, cigars, pipe and smokeless tobacco, snus, e-cigarettes, and other tobacco products, as well as logistics business. Imperial Brands serves customers worldwide.

McBride plc develops laundry, household cleaning, and personal care products. The Company's products include textile washing powder, dishwash products, fabric conditioners, shampoos, foam baths, deodorants, toothpastes, and mouthwashes. Products are sold under the McBride label through major European grocery retailers.

Tesco PLC, through its subsidiaries, operates as a food retailer. The Company offers online retailing, brick and mortar supermarkets, and a private-label brand of products. Tesco provides its services primarily throughout Europe, with additional activities in Asia.

The Estee Lauder Companies Inc. manufactures and markets a wide range of skin care, makeup, fragrance, and hair care products.  The Company's products are sold in countries and territories around the world.

L'Oreal SA manufactures, markets, and distributes health and beauty aids.  The Company produces colorants, styling, and hair care products for professional hairdressers, hair care, cosmetics, and skin care products and perfumes for consumers, luxury cosmetics and perfumes sold through department stores, perfumeries and travel stores, and dermatological and pharmaceutical products.

Beiersdorf AG develops, manufactures, and markets personal care, disposable medical, and adhesive products. The Company produces skin and hair care products, bandages, surgical gloves, compression stockings, sun block lotion, fastening systems, masking products, and packaging systems.

L'Oreal manufactures cosmetics. The Company offers mascara, lip gloss, foundation, eyeshadow, primer, nail polish, lipstick, face powder, blusher, and concealer, as well as skin, hair, and body care products. L'Oreal serves customers worldwide.

Haleon PLC provides consumer healthcare products. The Company offers therapeutic oral health, vitamins, cold and flu, minerals and supplements, pain relief, and digestive health products. Haleon serves customers worldwide.

Dabur India Ltd. manufactures soaps, detergents, hair oils, tooth powders, antacids and processed foods. The Company sells its products worldwide.

Shiseido Company, Limited manufactures cosmetic and toiletry products. The Company offers an array of makeup and skin-care products, toiletries, beauty salon, pharmaceuticals, foodstuffs, and fine chemicals.

Colgate-Palmolive (India) Ltd. manufactures consumer products in the oral care and body care area. The Company's products include soaps, cosmetics, toilet preparations, toothpaste, toothbrushes, shaving brushes, and glycerin.

Godrej Consumer Products Limited manufactures personal care, hair care, household care and fabric care products. The Company's products include toilet soaps, cosmetics, shaving creams, talcum powder, household cleaners and fabric detergents.

Kao Corporation is a manufacturer of household and chemical products. The company produces cosmetics, laundry and cleaning products, hygiene products, fatty chemicals, edible oils, and specialty chemicals.

Unilever PLC manufactures branded and packaged consumer goods, including food, detergents, fragrances, home and personal care products.  Dually-listed company with UNA NA.

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Unilever PLC (ULVR LN)

Selected European Holdcos and DLCs: October Report

The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a...

Jesus Rodriguez Aguilar

Unilever Unification - Index Impact

With the Unilever unification of the PLC and NV lines approved by the Dutch and British shareholders, we take a look at the spread between the two...

Brian Freitas

Unilever's DLC Unwinding: Shareholder Approval, Timetable, Listing Considerations.

Unification is expected to become effective on 29 November 2020, with dealings in new Unilever PLC shares commencing on 30 November 2020. Long UNA...

Jesus Rodriguez Aguilar

Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison

Blue Moon Group Holdings (BMG HK) (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first...

Sumeet Singh

Unilever: When Two Heads Are Not Better Than One. What About BHP's DLC?

Back on the 11 June, Unilever NV (UNA NA) / Unilever PLC (ULVR LN) announced it will (finally) unify its dual Anglo-Dutch corporate structure under...

David Blennerhassett

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