From rivalry to mergers

BUSINESS

Anglo-Dutch companies

Feb 10th 2005
From The Economist print edition

A brief history of the Anglo-Dutch business model

FOUR centuries ago, within 15 months of each other, the English and the Dutch set up rival East India companies. In 1826 a British foreign minister sent his country's ambassador in The Hague a (coded) message: “In matters of commerce the fault of the Dutch is offering too little and asking too much.” But business is business: why compete when you can combine? The two East India companies soon found it easier to trade in separate bits of Asia.

A century ago, the countries' rival oil companies agreed, as their joint history now puts it, that they “would do better working together”, and in 1907 created Royal Dutch/Shell. In the 1920s, Margarine Unie, a Dutch-led quasi-cartel, saw Lever Brothers extending from soap into food. In 1930 the pair became Unilever.

Much later came three other big Anglo-Dutch mergers. In 1993, Elsevier, a Dutch publisher, merged with Reed, a one-time paper firm that had spread into publishing. In 1999 British Steel and Hoogovens united as Corus, and Britain's Reckitt & Colman merged with a Dutch household-products rival, Benckiser.

Reckitt Benckiser has been a success. Avoiding errors made by the others, the two firms were swiftly and fully integrated into one; this week it reported record profits. But elsewhere “national” stresses have sharpened business ones. Royal Dutch/Shell was a merger of operations only: the group is still 60% owned by its Dutch parent, 40% by its distinct British one. Only last October, under fire for its oil-reserve accounting, did the two decide to become one, Royal Dutch Shell PLC, listed in London but headquartered in The Hague. Reed Elsevier is still owned 50-50; up to 1999 it was also two warring boards and headquarters, until a new Dutch ex-Unilever chairman brought in a British boss and a unified management structure.

Corus set off in 1999 proclaiming unity, but with a carefully balanced Anglo-Dutch board and joint chief executives. It soon lost them, and $1.5 billion in its first 15 months. A new sole—and British—chief executive did not end the clashes, as Dutch profits were eaten by losses in Britain. In early 2003, the supervisory board (the new CEO plus three Dutchmen) that has a say in Corus's Dutch operations rejected the sale of some profitable aluminium plants there. Corus was at war with itself, a war ended only by the arrival of a new chief executive—from France.

Unilever avoided most such problems. Although it has two parents, Unilever NV and Unilever PLC, chaired by Antony Burgmans in Rotterdam and Patrick Cescau in London, the same people sit on both boards; each chairman is vice-chairman to the other (awkwardly, both are “co-chairman” of the group). But now Mr Burgmans will be non-executive chairman. Mr Cescau will be chief executive. He has one advantage: like his counterpart at Corus, he's neither British nor Dutch but French.

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