Unilever (ULVR.L) will be removed from the Stoxx 50 (^STOXX50E) as it will no longer be eligible to remain on the euro area main stock benchmark as the consumer-goods giant moves its headquarters to the UK.
The announcement was made on Wednesday and comes into effect on 30 November.
Unilever will be replaced by gambling group Flutter Entertainment (FLTR.L).
Unilever’s shares were trading higher and reaching a weekly peak on Thursday, up 1.5%.
WATCH: Why can't governments just print more money?
Earlier this year, Unilever announced it would combine its UK and Dutch arms under a single British headquarters to allow for more deal-making flexibility. Removing the dual legal structures will result in one class of shares and a single pool of liquidity. This has become increasingly important in the face of the COVID-19 pandemic as consumer-goods companies see major shifts in shopping behavior, including more money being spent on online sales and unprecedented demand for cleaning products.
This follows a strategy reversal by chief executive officer Alan Jope from his predecessor, Paul Polman. The latter had abandoned efforts to consolidate the company in the Netherlands in the face of opposition from UK shareholders.
“This has been needed for at least 40 years – the structure of the company is outdated and not competitive,” chairman Nils Andersen said on a call with reporters as cited by Bloomberg. He added that just because the company got a “bloody nose” in 2018, it wasn’t going to “kick the can down the road on this for a few more years.”
Unilever’s replacement on the Stoxx 50, Flutter Entertainment, saw a gain of over 4.4% on Thursday, reaching a weekly high. It has been rallying 45% year to date, partly due to the completion of its takeover of Pokerstars-owner The Stars Group Inc.
Being included in such indices as the Stoxx 50 has been vital to a company’s share strength as passive investment funds hold a larger share of index-tracking funds.
WATCH: Unilever’s Q3 sales leap back to growth