Brexit delays Unilever decision on UK or Dutch base

Anglo-Dutch consumer-goods giant Unilever wants to consolidate its headquarters in the UK or the Netherlands, but Brexit is making it harder to choose.

The maker of Ben & Jerry’s ice cream and Dove soap said in a statement that a review of the dual structure is “progressing well,” after Chief Executive Officer Paul Polman told the Financial Times he would advocate delaying the decision because of a “moving playing field — with political turbulence out there.”

Unilever said in April it would consider doing away with its long-standing policy of maintaining separate corporations based in London and Rotterdam. A streamlined structure would be “in the best interests of Unilever and its shareholders as a whole,” giving it more flexibility for changes to its portfolio, the company said Tuesday. Its shares were up 1.8 per cent to € 49.26 at noon in Amsterdam.

Unilever previously said it hoped to decide on a single base by the end of December — just as talks on the UK’s departure from the European Union come to a head. UK Prime Minister Theresa May has less than a week to come up with a new offer on the country’s Brexit divorce bill if she wants to break the deadlock in negotiations by the end of the year.

The strategic review followed Unilever’s rebuff of an unsolicited $143-billion takeover bid from Kraft Heinz. By moving to consolidate its headquarters, the company waded into a political storm with governments in both countries putting up a fight to keep the base. Making the decision even more difficult, Dutch lawmakers are seeking to abolish the country’s 15 per cent withholding tax on dividends, a move that could help resident companies fend off hostile takeovers.

The company is hosting its annual event for investors in Englewood Cliffs, New Jersey, on Wednesday and Thursday this week.

The dual structure has been a feature of Unilever since it was formed in 1930 from the merger of a Dutch margarine maker with a British soap provider. The legal setup means the company has two boards, governance rules, shareholder bases and annual meetings. The company prepares separate accounts in euros and in pounds. The board intends to maintain its listings in the Netherlands, UK and US, Unilever said. It will also continue to apply both the UK and Dutch corporate governance codes and terminate the NV preference shares.

As Unilever’s strategic review progresses, the company is preparing for broader changes, including a sale of its slow-growing spreads business.

It has also hired executive search firm Egon Zehnder International to help it find a successor to Polman, who has served as CEO since 2009, according to a person familiar with the matter.

European Council President Donald Tusk gave May until December 4 to make extra efforts to resolve the differences between London and Brussels — most notably on the money and the thorny question of the future of the border between Ireland and Northern Ireland, which is part of the UK.