BUSINESS MERGER.

Manawatu Standard, Volume LVII, Issue 210, 5 August 1937, Page 9

BUSINESS MERGER.

LEVER BROS. AND UNILEVER. SAVING IN TAXATION. LONDON, Aug. 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 TJnirever 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 Empire assets will be _ owned by the amalgamated company in England and all the other assets by the Dutch company. The main object is to avoid double taxation and to improve the poistion of individual holders. As a result ot 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 atiect the ratio vivendi of exiiting companies, sjud the Economist of May 8. "ho Unilever grouping of 1927. however, was essentially a “gold-srandard-frce-trade conception. and since 1931, the twin logs 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, f from distributing a sAstantiallv increased dividend- The British company would necessarily have to pool sufficient profits to enable Unilover N.V. to pay the same dividend on the same nominal capital. In 1936 indeed, the British company earned 67 per cent, of tho whole group's profits, and Unilever N.V. no more than 33 per cent. The comparative freedem 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 likolv 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 Broth : ers the Economist said: “It is a peculiarity of this concern that, out of a capital of £61.691,000, no more than £8,500,000 consists of ordinary stock, while the remainder is divided into £303 i°t 1 per cent, preference stock, £15.655,000 of 8 per cent, preference stock, find £6j| millions of 20 per cent, preferred ordinary stocks. This type of structure will, invite the careful and consideration of any amalgamation terms.”