Unilever opts for single HQ in London

Why has Unilever management done a U-turn and opted for a single HQ?

David Sapsted

11 June 2020

UK Business Secretary Alok Sharma has hailed a decision by Unilever to establish a single legal base in London as a "clear vote of confidence" in Britain.

London shareholders revolt

At present, the consumer goods giant has legal corporate entities in both the UK and Holland. Two years ago, with Brexit on the horizon, the company announced it would establish a single HQ in Rotterdam, only for the move to be overturned in a revolt by London shareholders.Now the corporate U-turn is complete, with Unilever announcing on Thursday that it had decided to simplify its corporate structure and establish a single legal entity based in the UK. The company said some 6,000 British jobs and 2,500 in the Netherlands would not be affected.The conglomerate, whose home care and beauty/personal care divisions are based in the UK, and its food and refreshment arm in Holland, believes a single legal structure will allow it to become more agile as far as takeovers and restructuring are concerned.

Unifying Unilever's legal structure: flexibility, removes complexity, improves corporate governance

"It is also clear that the Covid-19 pandemic will create a business environment in which having as much flexibility and responsiveness as possible will be critically important," the company said.Nils Andersen, Unilever chairman, added, "Unilever's board believes that unifying the company's legal structure will create greater strategic flexibility, remove complexity and further improve governance."We remain committed to the Netherlands and the UK and there will be no change to Unilever's footprint in either country as a result of the proposed change to Unilever's legal parent structure."The Dutch media described the decision as a blow for its government while Mr Sharma tweeted, "Delighted to see Unilever’s proposals to become a fully incorporated UK company – a clear vote of confidence in the UK."

Will Dutch shareholders try to block the HQ move?

Sophie Lund-Yates, an analyst at stockbroker Hargreaves Lansdown, described the decision to focus on London as "a big departure" from the failed plan in 2018 when Unilever proposed a single listing on the Amsterdam exchange."Unilever's sales have been lacklustre of late, and the pursuit of a single listing is Unilever's way of making sure it's in the best possible shape to start the difficult process of rejuvenation," she added.However, Ms Lund-Yates wondered whether shareholders in the Netherlands might now try to block the move, as their British counterparts did two years ago.

Triumph of the City of London over Brexit

Dominic O'Connell, BBC business correspondent, commented, “Reports of the death of the City of London as the centre of European finance appear to have been greatly exaggerated. Unilever's decision to end its unusual two-country corporate structure after 90 years is, at its heart, a triumph of money (the City) over politics (Brexit)."Unilever has been under pressure from shareholders to simplify its structure for more than a decade. Many investors have thought the complexity cost money, made it difficult to shed poorly performing divisions, or made the company unattractive to potential suitors."It remains to be seen whether the government of Netherlands will try and overturn the decision. For the moment, however, the power of the City has prevailed."