Unilever is reorganising its business from a dual-structured company to a single legal entity incorporated in the Netherlands but will continue to base some of its operations in London, ending months of speculation that the Anglo-Dutch consumer goods giant would abandon the UK in the wake of Brexit.
Unilever has been owned through two separately listed companies, a Dutch N.V. and a UK Plc, since its formation in 1930. The firm has chosen to be incorporated in Rotterdam on the basis 55% of its combined ordinary shares are owned by the Netherlands’ operation. However, the company will maintain listings in London, Amsterdam and New York.
The Unilever House building in central London will remain open, with two of the FMCG giant’s divisions – the combined beauty and personal care, as well its home care arm.
In a stock exchange filing explaining the details today (15 March), Unilever said: “The strategic review concluded that a single holding company brings greater simplicity and more flexibility to make strategic changes in our portfolio in the future, should we choose to do so, including through equity-settled acquisitions or de-mergers.
“We intend to introduce a single holding company with one class of shares and a global pool of liquidity. This company will be incorporated and tax-resident in the Netherlands.”
Unilever said the two divisions to be headquartered in London will secure “nearly GBP1bn (US$1.4bn) per year of continued spend in the UK, including a significant commitment to R&D”.
The food and refreshments division will continue to be based in Rotterdam.
“Our decision to headquarter the divisions in the UK and the Netherlands underscores our long-term commitment to both countries,” Unilever said. “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.”
Each of the company’s three divisions will make their own investment decisions based on their strategic objectives and will make recommendations for capital allocation, both in the supply chain and in developing their portfolios through mergers and acquisitions.
Unilever added: “While we do not currently plan any major portfolio change, we believe it is appropriate to create a corporate structure that provides the group with the strategic flexibility and optionality to do so.
“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.”
In terms of the technicalities, the combined entity will now seek a premium listing in London, Amsterdam and New York. Shareholders in the Dutch and UK operations will receive the same dividends and capital distribution interests in the same relative proportions.
Unilever will continue to report its earnings and declare dividends in euros. Payments and record dates will continue on the current quarterly schedule.
Debt-wise, the guarantee currently enjoyed by the Dutch and UK operations will carry over into the new entity in “due course”.
Under the new umbrella, the company’s 7,300 UK employees and the 3,100 based in the Netherlands will be unaffected.