LONDON: Britain’s third biggest company Unilever (ULVR.L) (UNc.AS) picked Rotterdam over London for its main headquarters on Thursday in a blow to Prime Minister Theresa May’s government a year before Brexit.
The Anglo-Dutch maker of Dove soap, Lipton teas and Ben & Jerry’s ice cream launched a review of its dual-headed structure in 2017 after fighting off a $143 billion takeover from Kraft Heinz (KHC.O), triggering a battle between Britain and the Netherlands.
Under the new plan, Unilever will continue to be listed in London, Amsterdam and New York, and will divide into three divisions, keeping two based in Britain. That will enable it to retain its 7,300 staff in the United Kingdom.
The company said the decision to end 88 years of two parent-ownership was not linked to Brexit or any form of protectionism, but would simplify its structure and facilitate acquisitions.
However, British unions and supporters of EU membership bemoaned what they said was a deterioration in Britain’s competitiveness at a time when tax code changes and strong anti-takeover laws have made the Netherlands increasingly attractive.
“Let me categorically say that this had nothing to do with Brexit,” Unilever Chairman Marijn Dekkers told reporters.
“The board takes a 30 to 50 year decision. We think both countries are highly attractive investment climates and we will continue to invest in both countries as a result of this,” the Dutchman added.
It is unclear whether Unilever can remain in the FTSE 100 Index of leading UK stocks, a decision which could hit its shares if tracker funds are forced to sell.
Forged by the 1930 merger of Dutch margarine producer Margarine Unie and British soap maker Lever Brothers, Unilever employs nearly 170,000 people around the world to generate turnover of 53.7 billion euros ($66 billion) in 2017.
With a market value of 105 billion pounds ($146 billion), it competes with the likes of P&G, Kraft, Nestle, Colgate Palmolive, Reckitt Benckiser and independent brands.
In early 2017, the company – which had been thought to be too big to take over – managed to fight off one of the largest corporate bids ever made, but had to placate investors with a plan to boost profits and reinvigorate the group.
The short-lived bid battle has had widespread repercussions.
In the weeks after the offer, Chief Executive Paul Polman said Britain, known for promoting one of the most open economies in the world, should do more to protect national champions.
Unions in Britain have noted that Dutch companies have stronger powers to fight off unwanted takeovers, as seen last year when paint maker Akzo Nobel (AKZO.AS) fended off a 26.3 billion euro bid from U.S. rival PGG Industries (PPG.N).
“This is a tremendous boost,” Rotterdam Mayor Ahmed Aboutaleb said. “Rotterdam is a place that serves the interests of Unilever well as it will be less of a prey for takeovers.”
Chris Bryant, an opposition UK lawmaker and leading supporter of Open Britain which is urging post-Brexit Britain to remain close to the EU, said the choice of Rotterdam over London was a sign the business environment was weakening.
Unilever had held talks with both governments before making its decision, and the move will be seen as a blow to Prime Minister May, who is locked in talks with Brussels over the country’s departure from the EU on March 29, 2019.
Her government welcomed the reassurance on jobs, however.
In recent months, speculation had grown that Unilever would choose the Netherlands after Dutch Prime Minister Mark Rutte, himself a Unilever veteran, proposed a tax change seen as benefiting Anglo-Dutch multinationals.
Unilever said it did not expect any significant tax changes as a result of the deal. It said it had chosen the Netherlands because the Dutch company currently accounted for 55 percent of the group and those shares traded with greater liquidity.
As part of the restructuring, Unilever will create three divisions, with Beauty & Personal Care and the Home Care units being headquartered in London. The Foods & Refreshment division will be based in Rotterdam.
The company said it would give more authority to the heads of those divisions to set strategy.
The long-awaited announcement marks the latest change to the company after it agreed to sell its margarine and spreads business to U.S. private equity firm KKR (KKR.N) for 6.83 billion euros in December.
Polman was asked how long he would continue as CEO now he has made these changes, but said there was still a lot to be done and he remained energised by the job.
The restructuring, he said, would enable Unilever to make changes to its portfolio including major acquisitions, although he stressed he had no immediate plans to do this.
Unilever is not the only major company spanning Britain and the Netherlands – with Royal Dutch Shell and publishing group Relx having strong links with both countries.—Reuters