Unilever tries UK-Dutch corporate merger again, but with London as HQ
Unilever’s 2018 attempt to move its corporate HQ to Rotterdam in the Netherlands was stymied by shareholders voting against the move, but now the company is making a second attempt to consolidate its corporate structure, but this time the plan is to have the HQ in London instead.
The owner of Dove, Hourglass, Dollar Shave Club, Lynx, Toni & Guy and many more said unifying its group legal structure under a single parent company, Unilever PLC, creates “a simpler company with greater strategic flexibility, that is better positioned for future success”.
The cross-border merger between the Dutch Unilever NV and UK-based Unilever PLC would see shareholders of the former getting one share in the latter for every single NV share they own. The company will continue to have a listing in Amsterdam so those shareholders can still trade their shares as they did before and the firm will still report in euros.
So why is it happening? After a comprehensive review over the last 18 months, the firm said its board “continues to believe that moving from the current dual-headed legal structure to a single parent company will bring significant benefits”.
It will offer it greater flexibility and simplicity and remove complications if it wants to acquire brands with payment in shares, or to divest brands. For instance, it’s currently looking at shedding its tea business and “this would be significantly more challenging under the current legal structure than under a single parent structure”.
And it added that it’s also clear “the Covid-19 pandemic will create a business environment in which having as much flexibility and responsiveness as possible will be critically important”.
Following the move to a single parent legal structure, Unilever's strong presence in both The Netherlands and the UK is set to “remain unchanged. There will be no change to the operations, locations, activities or staffing levels in either [country]. There will also be no changes to the manufacture and supply of Unilever products as a result of unification.”
Certain business units that are currently headquartered in the Netherlands will stay there, as will those run from the the UK — the latter including its giant beauty operations.
Unilever’s set-up has been an anomaly for some time. The firm has been owned through the two separately listed companies since its formation in 1930 when the British Lever Brothers company merged with the Dutch Margarine Unie. They’ve always operated “as nearly as practicable as a single economic entity”. But the complexity of the agreements that enable this to happen have clearly been an issue for some years.
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