Prime Highlights:
- Unilever will merge its food business with McCormick to create a new company valued at about $65 billion.
- The deal is a major strategic move aimed at reshaping Unilever’s portfolio after earlier business changes.
Key Facts:
- Unilever is a global consumer goods company known for brands in food, personal care and beauty, including Knorr and Hellmann’s.
- McCormick is a leading US-based spice and seasoning company with a strong presence in flavor products worldwide.
Background:
Unilever has decided to combine its food business operations with American spice manufacturer McCormick to form a new company that will have a market valuation of approximately $65 billion.
The deal, announced by CEO Fernando Fernandez, marks his boldest move since taking charge in March 2025. It follows his decision last year to spin off Unilever’s ice cream business, which housed brands including Ben and Jerry’s and Magnum.
Under the agreement, structured as a Reverse Morris Trust for tax purposes, Unilever will spin off its food division and merge it with McCormick. Unilever and its shareholders will hold a 65% stake in the combined company, which has an estimated value of $29.1 billion, and their shareholders will receive $15.7 billion in cash. The deal establishes a valuation of Unilever’s food business at approximately $45 billion. Certain assets, including Unilever’s India operations, are excluded from the agreement.
Despite the scale of the transaction, investors reacted poorly. Unilever shares fell 3% to a near one-year low, while McCormick shares dropped 9% when Wall Street opened. Analysts questioned why Unilever was parting with a high-margin business for what they saw as a limited premium.
Unilever’s food division, home to Knorr stock cubes and Hellmann’s mayonnaise, generated sales of 12.9 billion euros last year, accounting for over a quarter of group revenue. However, sales growth in the segment has consistently trailed the company’s personal care and beauty units.
The merger comes alongside an ongoing cost-cutting programme and a company-wide hiring freeze linked to the widening conflict in the Middle East.