Unilever announced on Tuesday that it will combine its food business with spice maker McCormick, forming a new entity valued at approximately $65 billion. This merger marks the second-largest food industry transaction in history and represents a bold move by CEO Fernando Fernandez, who assumed leadership in March 2025. The deal follows Fernandez’s prior strategic decision to spin off Unilever’s multi-billion-euro ice cream division, which includes brands such as Ben & Jerry’s and Magnum.
While Unilever’s food segment is known for its high profit margins, its sales growth has lagged behind the company’s personal care and beauty divisions, hindering the goal of boosting overall group sales by 4% to 6% in the near future. Investor pressure to divest food brands intensified after billionaire activist shareholder Nelson Peltz acquired a stake in Unilever in 2022. Peltz’s involvement has been linked to the departures of former CEOs Alan Jope and Hein Schumacher, with Fernandez—formerly Unilever’s finance chief and a seasoned executive in beauty and wellbeing—appointed to streamline the company’s portfolio.
Despite the strategic intent, Unilever’s shares dropped 3% to nearly a one-year low following the announcement, as investors and analysts criticized the deal’s structure. McCormick’s shares also fell sharply, declining 9% at the opening of Wall Street trading. RBC analyst James Edward Jones questioned why Unilever would divest a business dominated by wholly owned brands such as Knorr and Hellmann’s for a modest control premium, leaving shareholders with a 55% stake in a large combined food company.
The transaction will be executed as a Reverse Morris Trust (RMT), a structure that offers tax advantages. Unilever will spin off its food division and merge it with McCormick, the owner of Cholula hot sauce. This deal represents the largest RMT involving a European firm, with Rothschild acting as joint-lead financial adviser to McCormick. Post-merger, Unilever and its shareholders will hold a 65% stake in the combined company, valued at $29.1 billion based on McCormick’s one-month volume-weighted average share price of $57.84. Additionally, Unilever will receive $15.7 billion in cash.
The deal values Unilever’s food business at nearly $45 billion and McCormick at about $21 billion. However, certain assets, including Unilever’s operations in India, are excluded from the agreement. RBC’s Jones remarked that while the deal will leave Unilever focused solely on household and personal care products, the process does not appear to be a seamless transition.
Unilever’s history in the food sector dates back to 1860, originating with a Dutch family’s butter trade business. The company itself was formed in 1929 through the merger of Margarine Unie and Lever Brothers, one of Europe’s largest industrial mergers at the time. Last year, the food division contributed just over a quarter of Unilever’s total annual sales of 50.5 billion euros and employed a significant portion of its 96,000 global workforce.
Chris Beckett, a consumer staples analyst at Quilter Cheviot and Unilever investor, described the deal as transformational for McCormick but incremental for Unilever. He noted that McCormick gains global scale and distribution, especially in condiments, and hopes to achieve stronger sales growth from Unilever’s brands.
Unilever’s extensive consumer brand portfolio also includes Dove soaps, Cif cleaning products, and Axe deodorants. Over the past century, the company acquired numerous food and beverage brands such as Marmite, Colman’s, and Horlick’s. However, in the last decade, health-conscious consumers have shifted away from packaged foods toward fresh groceries. The recent rise of GLP-1 weight loss drugs has further diminished demand for packaged foods, compounded by competition from lower-cost private label brands.
In the past year, Unilever has divested several non-core food assets, including snack brand Graze and plant-based meat brand The Vegetarian Butcher. Harsharan Mann, a portfolio manager at Unilever shareholder Aviva Investors, supported the food business disposal, citing muted volume growth in recent years. She also praised the RMT structure as a sensible approach to avoid tax complications that have affected similar deals, noting that global peers like Procter & Gamble have successfully used this method for tax-free divestitures.
This merger with McCormick coincides with Unilever’s ongoing cost-cutting program initiated in 2024, aimed at saving around 800 million euros over three years. Additionally, Unilever has implemented a global hiring freeze across all levels for at least three months, a move influenced by the escalating conflict in the Middle East. The exchange rate at the time of the deal is $1 to 0.8724 euros.
