Unilever’s London-base move approved by shareholders
FTSE 100 group could face €11bn exit fee for leaving Netherlands
Shareholders have backed Unilever’s plans to become a London-based company, a significant step in the consumer group’s attempts to simplify its corporate structure.
However, the FTSE 100 company must still overcome growing support for a bill that would hit the Anglo-Dutch group with an €11bn exit fee for leaving the Netherlands.
Unilever on Monday said that more than 99 per cent of investors in its UK arm had voted to base the group in London. It came three weeks after the group’s Dutch shareholders overwhelmingly voted in favour of the move.
A successful move to London would end the dual structure of the business that has been in place since Unilever’s formation from the merger of a Dutch margarine company and British soap maker Lever Brothers more than 90 years ago.
Two years ago, the company failed in its bid to transfer its entire business to the Netherlands.
Unilever said it planned to unify on November 29, but growing political support for a Dutch law that would hit multinationals leaving the Netherlands with billions in exit taxes could still scupper the plans.
Last week, the Green party in the Netherlands said it would press ahead with a vote on a private members bill which, if approved, would impose a retroactive €11bn exit fee on Unilever for choosing to relocate to the UK.
Unilever said earlier this year that if the initiative became law, the company would be forced to reverse its decision to relocate from Rotterdam. The planned law is designed to penalise companies with revenues of more than €750m that depart from the Netherlands for low-tax jurisdictions.
To become law, the measure needs to be passed by a majority in both houses of the Dutch parliament — a bar it may struggle to cross — and a process that could play out over many months.
Bart Snels, the Green MP in charge of devising the exit law, said on Friday that he would not withdraw the bill despite key independent legal advice suggesting the initiative would violate EU law.
Warren Ackerman, analyst at Barclays, said Unilever “ought to be concerned” if a vote on the bill is scheduled, as Green party representatives “know that if the vote succeeds, Unilever’s legal entity will remain in the Netherlands”.
“They also know that in 2018, Unilever suspended its last unification attempt, so there is also a precedent of Unilever changing its mind relatively quickly as circumstances dictate,” he added.
The Dutch government had originally tried to woo the group by scrapping a dividend tax on big companies, but retreated after a public backlash in 2018. Unilever was around the same time forced to drop plans to unify the company into a Rotterdam-based structure, following pressure from shareholders.