By Saabira Chaudhuri and Costas Paris 

LONDON -- Unilever PLC has decided to consolidate its dual headquarters in Rotterdam over London, an emotionally charged move that came despite last-minute lobbying from the British government.

In a Wednesday board meeting, directors decided on the Dutch city but Unilever's board was still receiving calls from the U.K. government on Wednesday night, according to a person familiar with the matter.

The company's announcement early Thursday came alongside details of a broader restructuring of its operations into three divisions with separate headquarters. Beauty and personal care, as well as a home care unit, will be based in London, while its foods and refreshment division will continue to be based in Rotterdam.

The maker of Dove soap and Ben & Jerry's ice cream said the 7,300 people it employs in the U.K. and the 3,100 people in the Netherlands won't be affected by the changes.

RBC analyst James Edwardes Jones said Unilever's announcement isn't a big deal for investors. "The decision over the location of Unilever's base is certainly politically charged, but in our view has little relevance from an investors or share price perspective," he said.

Unilever said the simplified structure will give it more flexibility to make portfolio changes and help long-term performance.

The news on its legal base confirms a Wall Street Journal article Wednesday that said the company's board had decided on the Dutch city.

Critics of Unilever's current structure have complained it is unwieldy and can interfere with deal making -- including by hindering the company's ability to use stock to make big acquisitions. The shares of the two operating companies, Unilever PLC and Unilever NV, aren't convertible and the value of a single share in each company must remain equal. That makes it tough to issue new stock to fund a deal.

The decision wasn't easy. Unilever had for months wrangled with the question of where to situate the combined company. The maker of consumer products such as Magnum ice creams and Hellmann's mayonnaise currently splits its headquarters between London and Rotterdam. That is a legacy of its dual structure, which essentially consists of two separate British and Dutch operating companies, each with its own shares.

Following an unsolicited takeover approach by Kraft Heinz Co. early last year, Unilever launched its review of that structure and determined that unification was in the best interests of the company and shareholders. The big question ever since has been whether Unilever would select London or Rotterdam to base a combined entity.

Unilever said Thursday its decision reflected the fact that shares in the Netherlands entity made up about 55% of the combined ordinary shares for the group and that these trade with greater liquidity than shares in the U.K. entity.

The decision has taken on great significance in the U.K., which is in the process of negotiating its exit from the European Union. Critics of that move -- triggered by a 2016 referendum -- have warned the split from the EU could force some big companies to move to mainland Europe to remain part of its common market and to continue to take advantage of the free movement of labor across the bloc, among other issues.

On Thursday, Unilever said it plans to continue to spend nearly GBP1 billion annually in the U.K. including on research and development.

In response, a U.K. government spokesman said the company had shown its long-term commitment to the country by locating what the government called its two fastest-growing divisions in the U.K., safeguarding jobs and investment.

"As the company itself has made clear, its decision to transfer a small number of jobs to a corporate HQ in the Netherlands is part of a long-term restructuring of the company and is not connected to the U.K.'s departure from the EU," the government spokesman added.

Unilever's current structure has been in place since Lever Bros., an English soap maker, and Margarine Unie, a Dutch margarine producer, agreed to join forces in 1929. The structure has evolved since then, but the company continues to operate like separate legal entities fused under a group-wide set of senior managers and directors.

The company plans to maintain listings in the Netherlands, the U.K. and the U.S. and will remain subject to British and Dutch corporate governance codes. It is currently unclear whether it will remain listed on the FTSE 100.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Costas Paris at costas.paris@wsj.com

 

(END) Dow Jones Newswires

March 15, 2018 04:31 ET (08:31 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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