Unilever Picks Netherlands Over U.K. for Single Headquarters

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The Unilever logo sits on the Unilever NV headquarter offices in Rotterdam, Netherlands.
The Unilever logo sits on the Unilever NV headquarter offices in Rotterdam, Netherlands. Credit: Jasper Juinen/Bloomberg

Unilever is consolidating its headquarters in the Netherlands, abandoning a separate London base in a blow to Prime Minister Theresa May's effort to maintain investment in the U.K. after it leaves the European Union.

The maker of quintessentially British brands like Marmite spread and Lipton tea is streamlining the dual nationality it has maintained for nearly a century. Unilever said the move will ease mergers and acquisitions, which have become a priority for slow-growing consumer-goods giants as predators take aim.

"It gives us more strategic flexibility to undertake major M&A using the stock or demerge parts of our business in the future,'' Chief Financial Officer Graeme Pitkethly said on a call, though the company said it doesn't currently envision large-scale transactions.

Losing the headquarters of the U.K.'s third-biggest company, operating in 190 countries, is a setback for May's vision of a post-Brexit economy open to the world. The shift runs counter to a move by information and events business RELX, which recently opted for a single London-based parent company after 25 years of also having a Dutch owner.

"Unilever's decision to pick the Netherlands over the U.K. is another sign of the weakening of the business environment in Britain since the referendum," Chris Bryant, a member of Parliament who supports staying in the bloc, said in a statement.

Multiple listings

Easing the U.K.'s pain, Unilever said it plans to base its beauty and personal-care division and the home-care business in London. It will continue to list its shares in both countries, as well as the U.S. The vast majority of the 7,300 people the company employs in the U.K. and 3,100 in the Netherlands won't be affected, it said.

Unilever shares were down 2 percent at 1:10 p.m., London, with those traded in Amsterdam falling 1.5 percent.

Unilever decided to consolidate its headquarters after staving off an unsolicited takeover bid from Kraft Heinz Co. last year. Activist investors have targeted rivals Nestle SA and Procter & Gamble Co. -- which, like Unilever, are facing sluggish sales of mainstream food and personal-care brands.

Dutch takeover laws provide more protection against hostile approaches than the U.K.'s code. Netherlands Prime Minister Mark Rutte used to work at Unilever, and CEO Paul Polman is Dutch. Rutte has proposed scrapping a dividend tax, making the country more attractive to multinationals.

The shift is "a great boost for the Netherlands and Rotterdam," Mayor Ahmed Aboutaleb said via a spokesman, adding that the company opted for a place where "the interests of Unilever are well served, where it will be less of a prey to acquisitions."

The move 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."

Airbus, Toyota

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. Multinational manufacturers including Airbus SE and Toyota Motor Corp. have reaffirmed their commitment to the U.K.

Unilever said several key executives, including personal-care chief Alan Jope and home-care head Kees Kruythoff, will move to London from current bases outside the U.K. The company said it hasn't decided whether Polman and Pitkethly will formally relocate from Britain to the Netherlands. More than 100 jobs have shifted to Rotterdam as part of the merger of Unilever's food and refreshment units.

"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.

The decision will help Unilever cut costs and simplify a convoluted structure it has maintained since the 1930 merger of Margarine Unie of the Netherlands and U.K. soapmaker Lever Brothers. The company hosts two annual general meetings, employs two boards composed of the same members and operates under separate takeover regulations.

End of year

The proposals are subject to approval of the British and Dutch entities' shareholders, with implementation expected toward the end of this year, Unilever said. The Dutch entity represents about 55 percent of the combined share capital and trades with greater liquidity than the British company, Pitkethly said.

"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.," he said.

-- Bloomberg News

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