Unilever’s decision to pick Rotterdam over London for its headquarter base, despite the UK Government’s best efforts, has made many quickly point out to this being a sign of decreasing confidence in Britain as a result of Brexit.
However, a deeper look into the Anglo Dutch giants decision to up-sticks actually reveals that the firm has been toying with this idea for a while, announcing last April that it would review its dual-headed structure in the UK and the Netherlands, following the fallout from a failed $143 billion approach from Kraft Heinz.
Nonetheless it’s still valid to ask whether Brexit played a key role in the company’s decision.
Interestingly, Unilever aren’t the only company who has considered a move away from the UK.
US investment bank Goldman Sachs has put more than a dozen UK-based banking, sales and trading staff on notice to relocate to Frankfurt by June, sources say. With the main reason being the bank deciding it can no longer wait for clarity from Prime Minister Theresa May on what Brexit will look like.
Meanwhile, Swiss-bank UBS expects to relocate London staff to EU offices including Frankfurt with the investment bank saying the lack of a Brexit transition deal will result in “significant changes” to its operations.
While the UK government has been in talks with Unilever to try and convince the company to stay in London, its firm’s chairman Marijn Dekkers and CEO Paul Polman are both from the Netherlands. While, Dutch prime minister Mark Rutte, a former employee of Unilever, has lobbied to make the firm’s sole headquarters in Rotterdam.
Regardless of these facts, having Unilever’s headquarters in Rotterdam puts the company’s board much closer to the centre of the European single market and will simplify its corporate structure.
While Brexit may not have been the sole reason for the headquarters move, there is a bigger question to be answered here of what Unilever leaving says for business in London and the UK moving forward?
“It’s too simplistic to view Unilever’s move purely through the prism of Brexit,” says Laith Khalaf, Senior Analyst, Hargreaves Lansdown. “There are lots of other factors at play. Unifying the corporate structure will simplify the company’s affairs, and the fact 55% of shares are held through the Dutch listing probably gave the Netherlands a head start on the UK.
“The abolition of Dutch withholding tax from 2020 also means Unilever can move to Rotterdam without fearing that international investors will shun its stock for tax reasons. The company also says a unified corporate structure will make M&A activity easier in future.
“That’s not to say there won’t be any implications for Unilever if the UK leaves the single market and the customs union, but any issues in that regard will need to be addressed wherever the company’s brass plaque happens to be.
“There are no clear knock on implications for other UK companies, in as much as Unilever is one. This is after all a company which sells its wares in 190 countries and reports in euros, and while there are 7,300 UK employees, they are only a fraction of the company’s 169,000 global workforce.
“European sales only account for around a quarter of the company’ revenues, and Unilever doesn’t even split out the UK in its periodic reporting. So while listed in the UK, and a large constituent of the FTSE 100, Unilever is in fact a global player.”