Brexit to blame? Not in the case of Unilever | Nils Pratley

Marmite maker’s choice of Rotterdam over London for HQ based on business, not politics

Nothing to do with Brexit? Actually, one shouldn’t be too sceptical about chief executive Paul Polman’s “categorical” denial that Brexit shaped Unilever’s choice of Rotterdam over London.

Leaving the EU plainly didn’t help the UK’s pitch, but one suspects the Netherlands got the nod for two unrelated reasons – one the company is happy to shout about, and one that it isn’t.

First, the official technical one. Some 55% of Unilever’s shares are currently held via the Dutch NV company, as opposed to the UK plc, and the group reports its results in euros. Sole incorporation in the Netherlands was the more natural way to unpick an Anglo-Dutch structure that has existed since the merger of Margarine Unie and Lever Brothers in 1929.

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At Relx, the former Anglo-Dutch combine Reed Elsevier, the currency and share factors were the other way around. The company opted for London as its sole HQ last month, a decision that should not be sniffed at. The owner of LexisNexis has a gloriously low profile but it is a top-20 FTSE 100 company, only slightly smaller than Barclays.

The second factor – despite the formal denials – is surely the Dutch and UK views of hostile takeovers. Unilever folk like the Dutch approach.

Remember the context. Unilever’s review was prompted by last year’s £115bn offer from the US giant Kraft Heinz. Polman defeated the bid over a weekend but the episode was an almighty shock to the corporate sense of identity.

Unilever could previously assume it was so big it was immune to hostile raiders, even those with a “fast and ruthless” style, as Polman described Kraft. It was surprised to find everybody is seen as fair game these days.

Unilever hates the accusation it is seeking sanctuary in the Netherlands. It is true, as Polman argues, that UK and Dutch takeover codes are similar. But, come on, he has said time and again that “a level playing field” is more likely to encourage the inclusive form of “stakeholder” capitalism that Unilever preaches, and he has always implied that Dutch fields are flatter. Note that the US group PPG encountered a political storm last year when it tried, and failed, to buy the famous Dutch paint-maker AkzoNobel.

Dutch scepticism about hostile bids may not have been the clincher, but it must have entered Unilever’s thinking. Nor should anyone be surprised that a company with a Dutch chairman and a Dutch chief executive picked the country where the prime minister, Mark Rutte, is a former Unilever employee.

Does the choice of the Netherlands matter? It does in that Unilever will probably disappear from the FTSE 100 index. That’s an embarrassing blow for the London market. It is also a defeat for ministers who lobbied furiously for London and would have crowed if they had succeeded.

But the UK jobs, as Unilever was at pains to say, are staying and two of the three divisions will be run from the UK. If the operational bases for personal care or home products had been exported, the link to Brexit would have been direct, obvious and alarming. Such calamities will probably follow in time elsewhere in UK industry, but Unilever’s legal rejig doesn’t qualify.

Airbus warning may mean turbulence for Melrose’s GKN bid

“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.” That’s one hell of a statement for a senior Airbus executive – Tom Williams, chief operating officer of the commercial aircraft division – to make. Everybody knows whose model he means – that of Melrose, currently bidding £8bn for GKN.

If the threat/warning/statement is sincere, it’s hard to dismiss as irrelevant. Airbus is GKN’s biggest customer, representing £700m of revenue, or 20% in the aerospace division.

Melrose can declare that it would spend as freely on research and development as GKN, but Williams’s main point is different. He’s worried about who will eventually own GKN’s businesses. Since Melrose aims to sell everything it buys within three to five years, there’s no easy comeback on that score.

One could take the view that the comments are a ruse. Airbus and GKN are obviously cosy. And Mike Turner, chairman of GKN, used to be the boss of BAE Systems, which used to have a 20% stake in Airbus. Well, yes, but Williams’s remarks are a long way from the usual rough and tumble of takeover bids. Maybe Airbus means it.

Melrose has a telephone call arranged with Williams’s French boss. Let’s see what that “trust us” pitch produces. If Airbus goes on the offensive again, or if other GKN customers join in, floating voters in this takeover scrap have something serious to think about.


Nils Pratley

The GuardianTramp

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