Unilever Plc (UL) said Thursday that it plans to move it global headquarters from London to the Netherlands, a move that will not only potentially offer more protection from hostile takeovers but also be seen as a major blow to Britain's post-Brexit business reputation.
Unilever, Britain's third-largest company, has a dual share structure and corporate governance rules that comply with both British and Dutch regulations, will simplify into a single structure that it says will allow it to react to business and merger opportunities more quickly. It will, however, retain its London listing, although it is unclear whether the shares will be able to remain on the FTSE 100 benchmark once the group's headquarters are moved from its iconic location along the River Thames in central London.
"Unilever's Board is fully committed to delivering long-term performance and sustainable value for shareholders. The Board believes the move to three Divisions and the simplification of our corporate structure will create a simpler, more agile and more focused company with increased strategic flexibility for value-creating portfolio change" said chairman Marijn Dekkers. "Our decision to headquarter the Divisions in the UK and the Netherlands underscores our long-term commitment to both countries. The changes announced today also further strengthen Unilever's corporate governance, creating for the first time in our history a 'one share, one vote' principle for all our shareholders."
Unilever said it would cancel outstanding "preference shares" and simplify its equity structure to a "one share, one vote" principal that it says will strengthen its corporate governance. Its new global headquarters will be based in Rotterdam and shares will be listed in London, Amsterdam and New York.
"The proposed simplification will provide greater flexibility for strategic portfolio change and help drive long-term performance," the company said. Dutch corporate laws would also likely shield it from hostile takeover attempts, analysts have said, given that they're more onerous than those existing under U.K. Takoever Panel rules.
Unilever also said it would streamline its overall business into three divisions -- Beauty & Personal Care, Home Care, and Foods & Refreshment -- as part of an ongoing strategic review that was launched following the failed unsolicited $143 billion takeover attempt last year by Warren Buffett-backed Kraft Heniz Co. (KHC) .
Around 7,300 of Unilever's global employees are based in the United Kingdom, with around 3,100 based in the Netherlands, although no job losses or relocations are anticipated from the decision, Unilever said.
Nonetheless, the move represents the most significant corporate exit from Britain since the country voted to leave the European Union in June of 2016. Prime Minister Theresa May's government had been lobbying hard to keep the maker of Dove Soap and Ben & Jerry's ice cream from leaving its London base, as officials feared an exodus of corporate brands eager to establish themselves on the EU side of the border once Britain formally exits in 2019.