Unilever Board Decides to Locate Headquarters in Rotterdam
March 14 2018 - 7:32PM
Dow Jones News
By Saabira Chaudhuri and Costas Paris
LONDON -- The board of Anglo-Dutch consumer-goods giant Unilever
PLC has decided to consolidate its dual headquarters in Rotterdam,
according to a person familiar with the matter.
In a Wednesday afternoon board meeting, directors decided on
Rotterdam, in the Netherlands, over London, this person said.
Unilever is set to announce the decision as early as Thursday.
The British government has been informed, according to the person
familiar with the matter. Senior company executives and
representatives for the British government were still talking
Wednesday after the board decision, this person said, injecting
some uncertainty into the final outcome.
"The decision has basically been taken, and it wasn't easy,"
said the person familiar with the matter.
A Unilever spokesperson wasn't immediately available to
comment.
The maker of consumer staples such as Dove soap and Hellmann's
mayonnaise currently splits its headquarters between London and
Rotterdam. 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 select London or Rotterdam to base a
combined entity.
The decision has taken on great 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 contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
March 14, 2018 19:17 ET (23:17 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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