McCormick Eyes Major Unilever Deal
- Buster Wurm
- 5 days ago
- 2 min read
Unilever appears to be on the verge of a major shake-up. According to the Wall Street Journal, the company is in advanced talks with McCormick to combine Unilever’s food division into a new joint entity valued at roughly $60 billion, including debt, with a potential announcement as soon as Tuesday. Bloomberg had first flagged the deal a week and a half earlier, reporting that McCormick had made an offer for Unilever’s food business at an equity value of as much as $33 billion.
The proposed structure appears designed to accomplish two things at once: expand McCormick far beyond its traditional spices-and-condiments base while allowing Unilever to continue shifting away from food and toward higher-growth categories such as beauty, personal care, and wellbeing. Bloomberg reported that Unilever CEO Fernando Fernandez wants about two-thirds of Unilever’s turnover to come from brands in those categories over the medium term, up from about half of revenue currently. The Journal similarly, deals would leave Unilever focused on beauty, personal care, and home products.
On the financial side, the Journal reported that Unilever shareholders would own about two-thirds of the new food business and receive roughly $16 billion in cash. The deal is also expected to use a Reverse Morris Trust, a transaction structure in which a company typically spins off a business and then merges it with another firm in a way that can reduce or avoid corporate taxes if certain conditions are met.
The transaction would also test McCormick’s ability to absorb a much larger business. Bloomberg it noted that McCormick’s market capitalization was about $14.5 billion, compared with Unilever’s roughly $135 billion, highlighting the scale gap between the two companies. If completed, the deal would mark McCormick’s biggest acquisition ever and reflect a broader industry trend: consumer companies simplifying portfolios as food growth slows and shoppers become more price-sensitive and health-conscious.
Update:
As of 2am on March 31st a deal has now been finalized according to Bloomberg as a $44.8 billion merger agreement, confirming that McCormick will combine with most of Unilever’s food business in a transaction that gives Unilever and its shareholders 65% of the combined company, while McCormick contributes $15.7 billion in cash and $29.1 billion in shares. The new company, which will retain the McCormick name, is expected to generate about $20 billion in annual revenue.
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