Unilever has picked London as its home in an about-face on the company’s 2018 decision to “go Dutch” which was abandoned after a revolt by British shareholders.
Despite a fresh internal review at the consumer goods group that this time selected London rather than Rotterdam as the location of its headquarters, the Unilever chairman, Nils Andersen, insisted it was not a flip-flop but a pragmatic way to complete an overdue overhaul of its unwieldy corporate structure.
Unilever was created in 1929 when the Dutch margarine producer Margarine Unie merged with the British soap maker Lever Brothers. Since then, it has been headquartered in London and Rotterdam.
It grew into a global consumer group with an annual turnover of more than €50bn (£44bn), as it snapped up other brands. It makes staples such as Marmite, Dove soap, Persil washing powder, Ben & Jerry’s ice cream and Knorr soup.
Unilever aired the UK’s first colour TV commercial in 1969 – an advert for Birds Eye peas. In 2017 the group fended off an unwelcome takeover approach from the US food giant Kraft – the £115bn deal would have been one of the largest in corporate history but raised fears over British jobs.
A year later the company announced it would scrap its dual structure and move to Rotterdam, but was forced to abandon the relocation after a UK shareholder rebellion. Two years on, Unilever has picked London as its headquarters.
“This is in no way a 180-degree turn,” said Andersen, who took over as chairman at the end of 2019. “We are doing the same thing which is getting the unification through and getting a simpler and more strategically flexible company out of the other end.”
He added: “There is absolutely no change in direction but a little bit of a change in where we land, but for the company it doesn’t make any difference.”
The company’s dual structure is a hangover from Unilever’s formation through the merger of a Dutch margarine producer and a British soapmaker 91 years ago.
The climbdown in 2018 represented a major blow to the credibility of the then top team – chairman Marijn Dekkers and chief executive Paul Polman, both Dutchmen who had lobbied hard for a relocation that they insisted was not linked to Brexit. Polman stepped down at the end of 2018 and was succeeded by Alan Jope, a Scotsman.
The business secretary, Alok Sharma welcomed the Unilever plan, tweeting: “Delighted to see Unilever’s proposals to become a fully incorporated UK company – a clear vote of confidence in the UK.”
Unilever, which owns more than 400 brands including Marmite, Cif and Dove, has always refuted that Brexit played any part in its thinking. Having a single parent company would make share-based acquisitions and demergers easier to do, the company said. That flexibility was “even more important” as the coronavirus pandemic was fomenting an “increasingly dynamic business environment”, it added.
The group employs 2,500 people in the Netherlands and 6,000 in the UK. It said the change would have no real impact on the day-to-day running of the business. “There will be no change to the operations, locations, activities or staffing levels in either the UK or the Netherlands as a result of unification,” it said in a statement.
The Dutch government, however, was disappointed by the latest review. “We regret this proposal as we would rather have seen a simplification with a Dutch company at the head,” the economy minister Eric Wiebes told parliament. “But at the same time we understand that this simplification has no consequences for Dutch operations.”
Unilever said it had engaged with the Dutch government ahead of the announcement and confirmed its foods and refreshment business, which is around 40% of sales, will remain based in Rotterdam.
British investors had objected to Unilever shifting its domicile to the Netherlands because they feared it would result in the company being ejected from the FTSE 100. That would have forced funds that track the FTSE 100, and funds that buy only UK stocks, to sell their shares.
If shareholders back the new plan, Unilever’s Dutch entity will be merged into its UK arm with Dutch investors receiving one Unilever plc share for each Unilever NV share they hold. The company will retain listings in London, Amsterdam and New York.
Ian Forrest, investment research analyst at the Share Centre, said: “This is a positive move for investors as it simplifies the structure and removes the danger of the shares leaving the FTSE 100 index. It should make any demerger of the company’s tea business easier if that goes ahead and Unilever clearly expects opportunities to arise from the current economic situation so speed of action could be important.”
