Unilever seals $45bn McCormick food merger as it sharpens focus health and beauty
Unilever has agreed a $44.8bn (£33.5bn) deal to combine its Foods business with US spices and seasonings giant McCormick, creating a global flavour group with annual revenues of around $20bn (£15bn).
The transaction will leave Unilever and its shareholders with a 65 per cent stake in the combined business, alongside $15.7bn (£11.6bn) in cash, as the FTSE 100 consumer goods giant accelerates its shift away from food and towards higher-growth health, beauty and personal care categories.
McCormick will retain its name, New York listing and Hunt Valley, Maryland headquarters, while establishing an international headquarters in the Netherlands and pursuing a secondary listing in Europe.
The deal is a major step in chief executive Fernando Fernandez’s plan to reshape Unilever into what it described as a “simpler, sharper, higher growth company”.
Fernandez said: “For Unilever, this transaction is another decisive step in sharpening our portfolio and accelerating our strategy towards high-growth categories as a €39bn pureplay HPC company with a proven sector-leading growth profile.
“We are unlocking trapped value through a growth-led separation of Foods, creating a scaled, global flavour powerhouse.”
Unilever’s Foods arm includes brands such as Knorr, Hellmann’s, Marmite, Maille and Bovril, while McCormick owns brands including Frank’s and Cholula. The combined company is expected to generate around $600m (£450m) of annual run-rate cost synergies by the end of year three, net of growth reinvestments.
Under the terms of the agreement, Unilever shareholders will own 55.1 per cent of the combined company, while Unilever itself will retain a 9.9 per cent holding. McCormick shareholders will own the remaining 35 per cent.
For McCormick, the merger hands the US group a significantly broader international footprint and a stable of globally recognised food brands.
McCormick chief executive Brendan Foley said: “This transformative combination accelerates McCormick’s strategy and reinforces our continued focus on flavour. Together, we will be better positioned to accelerate growth in attractive categories.”
The deal comes as Unilever continues a broader streamlining programme under pressure to improve performance and simplify its portfolio. The business previously outlined plans to save €800m over three years and cut 7,500 roles, as activist investor Nelson Peltz continues to push for a leaner operating model.
However, the market reaction was muted. Unilever shares fell more than five per cent following the announcement, while McCormick stock dropped by nearly five per cent in US trading.
The agreement is expected to complete by mid-2027, subject to regulatory approvals, McCormick shareholder backing and works council consultation.
The merger announcement came as Unilever also moved to tighten internal cost controls amid growing geopolitical disruption.
The company has reportedly introduced an immediate global hiring freeze for at least three months, citing uncertainty linked to the conflict in the Middle East and the potential impact on shipping, packaging and wider input costs.
Source: Retail Gazette
