Unite has welcomed the news that Unilever, producer of popular British consumer brands such as Marmite and Pot Noodle, is scrapping its plans to relocate its headquarters to Rotterdam following a shareholder revolt.
But the union has warned that the government must strengthen the UK’s laws that leave businesses exposed to hostile takeovers.
Following pressure from unions as well as from shareholders, who pledged to use their voting power to block the relocation plan, Unilever announced this morning that it would drop the move because it had not garnered enough investor support.
Unilever has historically maintained two headquarters in Rotterdam and London after the Dutch margarine firm Unie and British soap maker Lever Brothers merged to form the company 89 years ago.
Unilever’s initial plan, announced in March, to move its headquarters to Holland came in the wake of a hostile takeover bid from Kraft-Heinz last year, which was narrowly avoided. It is understood that it was Holland’s stronger takeover laws that in part motivated the firm’s management to relocate.
Dutch corporate governance laws afford much greater protection from unwanted takeovers through measures such as the so- called ‘poison pill’ defence, which enables firms to dilute the value of shares bought by a takeover bidder and so make the takeover much less attractive. Such moves in the UK are illegal.
What’s more, in countries such as Holland, workers’, national and social interests are also taken into account, instead of only shareholder interests, as is the case in the UK.
Labour MP and business industrial strategy and energy (BEIS) committee chair Rachel Reeves argued that Unilever’s planned exodus from the UK was down to the very real threat of a hostile takeover.
“Whatever the arguments made for incorporating into the Netherlands, there was a real suspicion that, in the wake of the hostile bid from Kraft Heinz, part of the motive for the move was that UK rules too easily allow takeovers,” she said.
“As a committee, we will want to consider looking at the government’s white paper on foreign takeovers to see whether the new regime should include additional safeguards.”
Unite national officer Rhys McCarthy agreed.
“This is good news, but Unilever’s change of heart has come about because of investor and union concerns; the government has been conspicuous in its silence,” he said.
“Ministers need to get a grip on Brexit and toughen up Britain’s lax takeover rules, because if it fails to do so more companies like Unilever will seek to flee overseas leaving UK workers out of jobs and the UK economy hallowed out.”
The dangers of hostile takeovers and the UK’s weak laws were recently highlighted after British engineering giant GKN fell prey to a takeover in March by ‘turnaround specialist’ Melrose.
Unite assistant general secretary Tony Burke pointed out in a speech last month at the TUC conference the consequences of a deal that was massively unpopular.
“Nobody wanted that deal,” he said. “Not the workforce, not the aerospace and the automotive industries; it was opposed by MPs including some Tories, yet it was allowed to go ahead in the full knowledge Melrose would split it up and sell parts of the business on and make massive profits, not just from future sales but from the very acquisition of GKN itself.
“Just five months on, parts of the GKN business are going up for auction and our members’ work is being transferred out of the UK,” he added.
Since the hostile takeover of Cadbury in 2010, which resulted in job losses and factory shutdowns, Unite has been lobbying for stronger takeover laws.
In March, Unite worked with Acuity Analysis on a report outlining ways in which the UK can strengthen its takeover laws.
“Our takeover law is simply inadequate when it comes to protecting British companies,” Unite general secretary Len McCluskey said. “What happens in this country would not be allowed to happen in France, Holland or Germany, but our government refuses to give our jobs and businesses the same protection.”