Why Unilever Is Abandoning its London Base for Headquarters in the Netherlands
Unilever is consolidating its headquarters in the Netherlands, abandoning a U.K. base it has maintained for nearly a century.
The move is a blow to U.K. Prime Minister Theresa May as she strives to maintain investment after the country leaves the European Union. It ends months of lobbying by the Dutch and British governments after the maker of Marmite spread and Dove soap said last year it would streamline its dual-headquarters structure.
Unilever, formed through the 1930 merger of Margarine Unie of the Netherlands and U.K. soapmaker Lever Brothers, currently hosts two annual general meetings, employs two boards composed of the same members and operates under separate takeover regulations in each of the two countries.
“We chose the Netherlands because pretty simply, at the end of the day, the Dutch company is quite a bit bigger than the U.K.,” Chief Financial Officer Graeme Pitkethly said on a call. The Netherlands entity represents about 55% of the combined share capital and trades with greater liquidity than the British company, he said.
Shares of Unilever NV and Unilever Plc were little changed in morning trading in Amsterdam and London.
Softening the blow to the U.K., Unilever plans to base its beauty and personal-care division and the home-care business in London. It will continue to have stock listings in both countries, as well as the U.S. The proposals are subject to approval of the British and Dutch entities’ shareholders, with implementation expected toward the end of this year, the company said.
Unsolicited Takeover Bid from Kraft Heinz
Unilever decided to consolidate its headquarters after staving off an unsolicited takeover bid from Kraft Heinz Co. last year. Moving to a single base will make it easier for the company to conduct mergers and acquisitions, Pitkethly said.
Netherlands Prime Minister Mark Rutte used to work at Unilever, and the company’s chief executive officer, Paul Polman, is Dutch. Rutte has proposed scrapping a dividend tax in a move that would make the country more attractive to multinationals. Dutch takeover laws provide more protection against hostile approaches than the U.K.’s code, requiring boards to take into account the interests of workers, not just shareholders.
The move also keeps Unilever’s headquarters within the EU after the U.K.’s expected departure from the bloc. Its base in Rotterdam will continue to benefit from free cross-border movement of labor, though Pitkethly said the decision was made on other grounds.
“It’s a pretty historic move and it’s certainly not connected to Brexit,” he said. “Why not? Because it’s such a long-term view we’re taking for the next 30, 50 years.”
The move follows U.K. Chancellor of the Exchequer Philip Hammond’s portrayal of Britain as an attractive destination for foreign investment as he provided an update on the country’s budget this week. Last month, information and events business RELX said it plans to simplify its corporate structure, opting for a single London-based parent company after 25 years of also having a Dutch owner.
‘Not Connected’ to Brexit
“As the company itself has made clear, its decision to transfer a small number of jobs to a corporate HQ in the Netherlands is part of a long-term restructuring of the company and is not connected to the U.K.’s departure from the EU,” the U.K. Business Department said in a statement.
Unilever employs about 7,300 people in the U.K. and 3,100 in the Netherlands. The vast majority of those positions won’t be affected by the move, the company said. More than 100 jobs have already been relocated from London to Rotterdam as part of the merger of its food and refreshment units, which include Lipton tea and Knorr stock cubes.