Published: 21/02/2007

In March 2006, financial market analysts speculated that Goldman Sachs is putting together a group of private-equity funds to make a £30 billion bid for Unilever in its entirety and taking the company private.

That speculation alone drove up Unilever’s shares on the London and Amsterdam exchanges. Even a failed bid would have a serious impact on Unilever workers, since private-equity pull outs often lead other institutional investors to abandon their shares, causing stock prices to plummet. This then leads to further cuts and restructuring to generate the corporate cash flow needed to recover share prices through buybacks and other schemes to boost shareholder value and meet the demands of financial markets.

Ten years ago these demands were reported in The Economist magazine, where financial market analysts and fund managers – including Goldman Sachs expressed their dissatisfaction with Unilever’s performance. The criticism of analysts was that the £490 million restructuring to close plants across Europe was not enough. According to The Economist, “… the decimation of its food factories in Europe has left 140 survivors, far too many, in the view of analysts.”’ Four years later Unilever executives launched the “Path to Growth Strategy”, closing more plants and selling off 140 businesses to generate a €7.3 billion cash flow.

In 2006 Unilever executives raised another £1 billion in cash through the sale of its frozen food operations to Permira, including the award-winning Lowestoft plant. The purpose of this “cashing in” is clear: in just eight weeks in 2005 (from 3 October to 9 December) Unilever spent €500 million in share buy-backs boosting its own share prices to the benefit of shareholders and the top

See: Neil Hume, “More takeover rumours lift Unilever”, The Guardian, Friday January 20, 2006.