Brexit to blame? Not in the case of Unilever | Nils Pratley

Nothing to do with Brexit? Actually, one shouldn’t be too sceptical about chief executive Paul Polman’s “categorical” denial that Brexit shaped Unilever’s choice of Rotterdam over London.

Leaving the EU plainly didn’t help the UK’s pitch, but one suspects the Netherlands got the nod for two unrelated reasons – one the company is happy to shout about, and one that it isn’t.

First, the official technical one. Some 55% of Unilever’s shares are currently held via the Dutch NV company, as opposed to the UK plc, and the group has reported its results in euros for years. In that sense, formal incorporation in the Netherlands was the natural way to unpick an Anglo-Dutch structure that has existed since the merger of Margarine Unie and Lever Brothers in 1929.

At Relx, the former Anglo-Dutch combine Reed Elsevier, the currency and share prices were arranged the other way around. It opted for London as its sole HQ last month, a decision that should not be sniffed at. The owner of Lexis-Nexis has a gloriously low profile but it is a top-20 FTSE 100 company, only slightly smaller than Barclays.

The second factor – despite the formal denials – is surely the Dutch and UK views of hostile takeovers. Unilever folk like the Dutch approach.

Remember the context. Unilever’s review was prompted by last year’s £115bn offer from US giant Kraft Heinz. Polman defeated the bid over a weekend but the episode was an almighty shock to the corporate sense of identity.

Unilever could previously assume it was so big and successful that it was immune to hostile raiders, even those with a “fast and ruthless” style, as Polman described Kraft. Suddenly, it discovered everybody is viewed as fair game these days.

Unilever hates the accusation that it is seeking sanctuary against future bids in the Netherlands. It is true, as Polman argues, that the UK and Dutch takeover codes are similar. But, come on, he has said time and again that “a level playing field” is more likely to encourage the inclusive form of “stakeholder” capitalism that Unilever preaches, and he has always implied that Dutch fields are flatter. Note that US group PPG encountered a political storm last year when it tried, and failed, to buy famous Dutch paint-maker Akzo-Nobel.

Dutch scepticism about hostile bids may not have been the clincher – but it must have entered Unilever’s thinking. Nor should anyone be surprised that a company with a Dutch chairman and a Dutch chief executive picked a country where the prime minister, Mark Rutte, is a former Unilever employee.

Does the choice of Netherlands matter? It does in that Unilever will probably disappear from the FTSE 100 index. That’s an embarrassing blow for the London market. It is also a defeat for ministers who lobbied furiously for London and would have crowed if they had succeeded.

But the UK jobs, as Unilever was at pains to say, are staying and two of the three divisions will be run from the UK. If the operational bases for personal care or home products had been exported, the link to Brexit would have been direct, obvious and alarming. Such calamities will probably follow elsewhere in UK industry in time – but Unilever’s legal re-jig doesn’t qualify.