A GREAT MERGER

Dominion, Volume 30, Issue 265, 5 August 1937, Page 11

A GREAT MERGER

Lever Brothers and Unilever DUTCH ASSETS SEPARATED By Telegraph.—Press Assn. —Copyright. (Received August 4, 7.35 p.m.) London, August 4. The proposed reorganisation of the Unilever group includes the amalgamation of Lever Brothers and Unilever, Limited, Unilever N.V. changing its name to Lever Brothers and Unilever N.V. shareholders in Unilever, Limited, are being offered exchange into “Lever Brothers and Unilever, Limited,” on a pound-for-pound basis. There will be a mutual sale of assets, so that the British Umpire assets will be owned by the amalgamated company in Rugland and all the other assets by the Butch company. The main object is to avoid double taxation and to improve the position of individual holders. As a result of the amalgamation, the general reserve and carry forward will amount to more than £10,000,000. The abandonment of international conceptions is common in modern economic life, but in few cases does it affect the ratio viveudi of existing companies, said the "Economist” of May 8. The Unilever grouping of 1927, however, was essentially a “gold-standard-free-trade” concention, and since 1931, the twin legs of the colossus have had no fixed relationship, owing to the departure of sterling from gold, which the guilder followed last September. The arrangement between the two companies, whereby each must make equal distributions, prevents the British company, under present circumstances, from distributing a substantially increased dividend. The British company would necessarily have to pool sufficient profits to enable Unilever N.V. to PUJ' the same dividend on the same nominal capital. In 1936, indeed, the British company earned 67 per cent, of the whole group’s profits, and Unilever N.V. no more than 33 per cent. The comparative freedom of business within the sterling area, and the difficulties of the Dutch "company in making and transferring profits in Central Europe, account largely for this divergence, which seems likely to continue,. Moreover, if direct transfers were made from Unilever Limited to Unilever N.V. to balance the difference in profits, serious double taxation would be involved. Regarding the position of Lever Brothers the “Economist” said: “It is a peculiarity of this concern that, out of a canital of £61,691,000, no more than £8,500,000 consists of ordinary stock, while the remainder is divided into £3oi millions of 7 per cent, preference stock, £15,655,000 of 8 per cent, preference stock, and £6} millions of 20 per cent, preferred ordinary stocks. This type of structure will invite the most careful and equitable consideration of any amalgamation terms.”