Marmite maker Unilever is to abandon its Anglo-Dutch structure and move its legal base to London, less than two years after a failed bid to shift the company’s headquarters to the Netherlands.
In a move that could pave the way for a potential break-up of the business, the firm said the change to its legal structure would make it easier to carry out acquisitions or sell-offs – including a potential sale of its tea business, which makes PG Tips.
The decision comes after Unilever was forced to scrap plans to move its headquarters to Holland in 2018 under former chief executive Paul Polman, following uproar among investors.
One top shareholder called the announcement a “whopping great U-turn” despite Unilever’s protestations to the contrary.
Nils Andersen, who became Unilever chairman last year, insisted the latest proposals were not a change in direction from the group’s original strategy and followed an 18-month review.
“Let me be very clear, in no way is this a 180-degree turn. “This is [about] preparing for the future. This has been important for years because the structure of the company is outdated, and it’s not competitive,” he said.
Chief executive Alan Jope added: “It would be gross mischaracterisation to call it a U-turn. It’s a slightly different way of executing the same strategy.”
He said Unilever was about halfway through a strategic review of its tea business announced in January, with multiple options being considered for the division.
The company said the review had highlighted the disadvantages caused by its complicated legal structure, with two technically separate businesses in the Netherlands and the UK. This made a potential demerger significantly more challenging, Mr Jope said.
Institutional shareholders Columbia Threadneedle and Legal & General Investment Management, which fiercely opposed Unilever’s plans to switch headquarters in 2018, both backed the move on Thursday.
“Their proposal has a clear strategic logic and alignment for the business and will be good for all shareholders,” said Iain Richards, head of responsible investment at Columbia Threadneedle.
Mr Richards added that the proposals underlined the confidence Columbia Threadneedle has in Unilever’s chairman and chief executive, as well as the direction of the business.
Unilever said it will maintain its listings on the Amsterdam, London and New York stock exchanges if the plans are successful, with Dutch shareholders getting one new Unilever plc share in exchange for each Unilever NV share held.
The company will need approval from just 50pc of its Dutch shareholders to push the plans through – lower than the 75pc threshold required when it tried to move its headquarters to Rotterdam in 2018.
That previous effort was seized on by anti-Brexit campaigners of evidence that leaving the European Union would damage corporate Britain.
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Unilever – whose brands also include Ben & Jerry’s ice cream and Domestos bleach – insisted the merger would have no impact on its operations, locations, activities or staffing levels in either the UK or the Netherlands.
British Business secretary Alok Sharma called Unilever’s proposals “a clear vote of confidence in the UK”, but Holland’s economy minister Eric Wiebes said the country “would rather have seen a simplification with a Dutch company at the head”.
Mr Andersen said as part of its negotiations with the Dutch government, Unilever has committed that if it chooses to split off its food and beverages business at any point then this company will be based and listed in the Netherlands.
Unilever’s dual-headed structure has been in place for more than 90 years, since it was created from the merger of a Dutch margarine company and British soap maker Lever Brothers.
Analysts at RBC questioned why Unilever did not pursue a strategy of moving its legal base to London in 2018.
They said: “There’s one big difference between Unilever’s latest plan to unify its legal structure: it expects to remain a constituent of both the UK’s FTSE index and Dutch AEX index.
“If the AEX indeed proves more susceptible to Unilever’s inclusion than the FTSE did, we see no reason why the proposal won’t succeed … which raises the question: why didn’t management do it this way round in 2018?”
One investor suggested Unilever’s change of management had influenced the decision. Mr Polman stood down in November 2018, a month after the aborted move to Rotterdam, and former chairman Marijn Dekkers left in November last year.
The shareholder said: “Previously Unilever had a Dutch chief executive and chairman – were they really going to be the ones to take Unilever out of the Netherlands? Whereas now you’ve got a Glaswegian [Jope] and a Dane [Andersen] – presumably that can’t have hurt.”
After initially rising, Unilever shares closed 1pc lower at £43.36, valuing it at £111bn – making it the biggest company on the FTSE 100, just ahead of AstraZeneca and Royal Dutch Shell.