KEEP UNILEVER IN BRITAIN!
It’s as British as Marmite. To lose it would be a calamity — and a betrayal by our ministers
THE idea that a firm as prestigious and influential as Unilever, with a British heritage dating back to its foundation at Port Sunlight on the Wirral in the late 19th century, should be proposing to leave these shores is a terrible shock.
Unilever is as British as Marmite – one of its big-name products – and 60 per cent of its annual sales of £54billion originate from the UK.
The prospect of the giant moving out of the City became a reality last week when a 200-page prospectus, filled with complex technical detail and legalese, was delivered to investors who will vote on the issue at the end of next month.
If the Anglo-Dutch behemoth were to leave this country, it would have to quit the FTSE 100 index and, as a result, many of the big pension funds and insurers that look after the retirement funds of every pensioner and future retiree in Britain would be precluded from owning shares in one of our best managed and most ethical and environmentally-conscious companies.
The rules of many UK pension funds require that they only invest in UK-quoted companies for reasons of prudence, accountability and governance.
Not surprisingly, one of the country’s biggest investors, the insurer Aviva, is rightly crying foul over the idea of Unilever’s move – arguing that the firm would no longer be a British company.
Aviva’s chief investment officer, David Cumming, told the Financial Times: ‘We are not supportive and will vote against it. It doesn’t add any value for us and we lose quite a large company from the index. We don’t see any justification for the move.’
The reason Unilever wants to rebase in the Netherlands is founded on its bruising experience last year when it was subject of a £110billion takeover bid, which ultimately failed.
In what would have been the second largest corporate deal in history, US giant Kraft Heinz (backed by private equity firms and the support one of the world’s richest men, Warren Buffett) launched an unsolicited bid for the maker of countless household names such as Dove soap and Hellmann’s mayonnaise.
Unilever’s Dutch chief executive, Paul Polman, a staunch advocate of ethical capitalism, fought off the bid and vowed to protect Unilever’s golden heritage from predators.
To try to guarantee this and prevent any future raids, it was felt that the firm’s Anglo-Dutch structure, with share quotations, boards and headquarters in both Britain and Holland, should be simplified. This, management feels, is best achieved by a switch to Rotterdam.
The intention is that Unilever will follow Royal Dutch Shell and the publishing and media colossus Reed Elsevier (now renamed Relx) which both separately decided to unify their shares under one umbrella while keeping share quotations in London as part of the FTSE 100 index.
But Unilever wants to go one step further by coming out of the FTSE 100, claiming that it has more major Dutch than
British investors. The truth is that the British Establishment’s reaction has been pathetic.
It has shown monumental weakness and done nothing to ensure that Unilever stays here, while the Dutch government has done all in its power to encourage the move.
A juicy carrot offered to Unilever chiefs by the Netherlands is the abolition of a measure that forces companies to pay the tax on dividends distributed to shareholders upfront. This brings the Dutch system into line with the UK, which did the same several years ago as part of a successful effort to simplify our tax structure and make Britain the most attractive location for inward investment from overseas in Europe.
This tax change may have been the decisive factor for a Dutchdominated board of directors. But there can be no doubt that their planned move to Rotterdam has been influenced by the Government’s woeful recent record at defending British companies against foreign predators.
IT’s a tragic truth that Britain has been allowed to become the most open market in the world to overseas takeovers – often with disastrous consequences for our national interests.
For example, the £11.5billion takeover of Cadbury by Kraft led to the chocolate giant’s headquarters closing, its tax domicile switching from Britain to low-tax switzerland and the unpopular meddling with the size, ingredients and taste of emblematic brands, including the Creme Egg.
Other leading British brands have also been sold off, such as Costa coffee being taken over by Coca Cola, a company that has been heavily criticised for tax avoidance.
By contrast, the Dutch authorities are much more protective against foreign takeovers.
Last year, the chemical and paint giant Akzo Nobel (the owner of Britain’s Dulux brand) defended itself against a hostile bid by garnering the support of works councils, which have a key role in such takeover talks, as well as using provisions in Dutch competition law. Indeed, there is a clear view among analysts and some shareholders that the real purpose of Unilever’s proposal to move its domicile is to give itself maximum protection from any future bids for the group or attempts to force it to demerge any of its major brands.
Aside from any other considerations, I am convinced that the decision to migrate from Britain makes no commercial sense.
The fastest growing part of Unilever’s diverse business involves beauty brands such as Dove and household products including Persil. There seems to be an insatiable demand for them from emerging economies in Asia and Latin America. The brains behind these bestsellers would remain in the UK because they are expected to make up 75 per cent of global sales, while the teams behind Unilever’s ice cream range Ben & Jerry’s and lesser products such as Lipton tea will be working in Holland.
Whatever the management thinks, the major restructuring decision to separate the share quotation base and domicile from the home of the company’s main business is irrational.
Inevitably, too, there are bound to be profound concerns that the Treasury could lose millions of pounds of corporate taxes from Unilever as a result of a switch to Rotterdam.
significantly, Holland has a reputation as a home for tax avoidance, with laws that offer a shield from taxation on profits.
SUCH enticements have lured firms including starbucks, Google and IBM to set up offices, while the Rolling stones and U2, too, have taken advantage of Dutch tax shelters.
Of course, there has been a widespread suspicion that Unilever’s break from the FTsE 100 is being done as a protective measure in case trading conditions suffer as a result of Brexit.
However, my conversations with Unilever executives do not lead me to think this is a major issue, although it may be preying on the minds of Dutch shareholders and bosses driving the process.
Even so, I am utterly convinced that if Unilever leaves Britain, the company will do itself great damage.
Its shares would be less attractive to both overseas and British investors who value Anglo-saxon capitalism, the weight of financial expertise in Britain and access to the strongest capital markets in Europe.
With Britain’s national interest at stake, is it beyond hope that the Government might finally wake up to the huge potential cost to this country’s economy of what would be a calamitous decision for a company as important as Unilever to move its HQ abroad?