UN Unilever NV

By Saabira Chaudhuri and Costas Paris 

LONDON -- The board of Anglo-Dutch consumer-goods giant Unilever PLC is favoring a plan that would consolidate its dual headquarters in Rotterdam, according to a person familiar with the matter.

The maker of staples such as Dove soap and Hellmann's mayonnaise currently splits its headquarters between London and Rotterdam, in the Netherlands. That is a legacy of its dual structure, which essentially consists of two separate British and Dutch operating companies, each with its own shares.

Following an unsolicited takeover approach by Kraft Heinz Co. early last year, Unilever launched a review of that structure and determined that unification was in the best interests of the company and shareholders. The big question ever since has been whether Unilever would pick London or Rotterdam to base a combined entity.

The company's board was expected to meet Wednesday to discuss the issue and could make a decision later in the day. An announcement could come as early as Thursday.

"As it stands now, Rotterdam is favored over London," a person familiar with the matter said. A Unilever spokesman said Wednesday afternoon that a decision by the board hadn't been made. He declined to comment further. Sky News reported earlier Wednesday that Unilever's board was preparing to vote for Rotterdam.

The decision has taken on outsized significance in the U.K., which is in the process of negotiating its exit from the European Union. Critics of that move -- triggered by a 2016 referendum -- have warned the split from the EU could force some big companies to move to the Continent to remain part of its common market and to continue to take advantage of the free movement of labor across the bloc, among other issues.

Unilever, one of Europe's biggest companies, has taken into account issues related to Brexit, as well as specific protections the Netherlands affords against hostile takeovers, according to the person familiar with the matter.

Dutch Prime Minister Mark Rutte is a former Unilever executive who maintains close ties with the company, speaking at dinners it organizes and attending sustainability-focused events alongside Unilever Chief Executive Paul Polman.

Unilever's roots run deep in the U.K., too. The company, which has about 7,000 employees in the country, has three global research facilities here in addition to various manufacturing sites and distribution depots. Its London offices occupy an imposing neoclassical art deco edifice overlooking the River Thames. There are unlikely to be significant job losses associated with any move, according to the person familiar the matter.

Unilever's current structure has been in place since Lever Bros., an English soap maker, and Margarine Unie, a Dutch margarine producer, agreed to join forces in 1929. The structure has evolved since then, but the company continues to operate like separate legal entities fused under a group-wide set of senior managers and directors.

Unilever said after completing its review that a combined structure would provide "greater ongoing strategic flexibility for value-creating portfolio change."

Critics of the current structure have complained it is unwieldy and can interfere with deal making -- including by hindering the company's ability to use stock to make big acquisitions. The shares of the two operating companies, Unilever PLC and Unilever NV, aren't convertible and the value of a single share in each company must remain equal. That makes it tough to issue new stock to fund a deal.

The company previously has said it plans to maintain listings in the Netherlands, the U.K. and the U.S. and would remain subject to British and Dutch corporate governance codes.

--Jason Douglas in London contributed to this article.

(END) Dow Jones Newswires

March 14, 2018 13:37 ET (17:37 GMT)

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