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Unilever reverses plan to close London headquarters
[LONDON] Unilever, the consumer products giant, has given up on plans to close its London headquarters, bowing to shareholder criticism of a move to simplify its corporate structure.
The company announced in March that it would make Rotterdam, the Netherlands, its sole headquarters. The move would have marked an end to Unilever's life as a conglomerate with two corporate homes that was rooted in its formation through the merger of a British soap maker and a Dutch margarine producer nearly a century ago.
But the plan was both a symbolic and a financial blow for Britain. Unilever, a British corporate icon whose products run from Dove soap to Lipton tea to Marmite, announced plans on leaving for the Continent as Britain was negotiating its breakup with the European Union. (The company has denied any links between the move and Brexit.)
Analysts saw the change of plans as a blow to Unilever's chief executive, Paul Polman, who championed the move as a way to make the company more agile and better able to strike mergers. Such was Polman's belief in the plan that he campaigned for it, including on the BBC.
But leaving London could have meant that Unilever would be dropped from the FTSE 100 stock index, forcing several large mutual funds to sell their holdings.
For that reason, many big money managers, including Legal & General Investment Management and M&G Investments, publicly criticised the plan, leaving it unclear whether Unilever could prevail in a shareholder vote on the matter this month.
"We recognize that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw," the company said in a statement Friday, though it maintained a belief that the plan was the correct move.
"The board continues to believe that simplifying our dual-headed structure would, over time, provide opportunities to further accelerate value creation and serve the best long-term interests of Unilever," Marijn Dekkers, Unilever's chairman, said in the statement. "The board will now consider its next steps and will continue to engage with our shareholders."
Unilever said last year that it would review its legal structure after Kraft Heinz briefly considered a US$143 billion takeover of the company.
The reversal is a victory for British government officials who have lobbied hard to persuade Unilever to maintain its London headquarters. Britain's business secretary, Greg Clark, praised the company's move on Twitter as "a welcome decision by @Unilever board having listened to shareholders."
British shares in Unilever were down less than 1 per cent Friday, closing at 4,053 pence.