Unilever in talks to combine food business with McCormick in $15.7B deal

Unilever said on Tuesday it is in advanced discussions to combine its food business with McCormick & Company in a deal that could reshape its portfolio.

The proposed transaction would deliver about US$15.7 billion (approx. $21.9 billion) in cash to Unilever while giving its shareholders a controlling stake in the combined entity.

If completed, Unilever investors are expected to hold around 65% of the merged business.

The company said discussions are ongoing and there is no certainty that a deal will be reached.

“Work remains ongoing to agree and finalise a transaction, and it is possible that an agreement could be concluded today, although there can be no certainty that a transaction will be agreed,” Unilever said in a statement.

Deal structure and valuation

The transaction is expected to be structured as a Reverse Morris Trust, allowing Unilever to spin off its food division and merge it with McCormick in a tax-efficient manner.

Analysts at Barclays valued Unilever’s food business at between €28 billion (approx. $44.7 billion) and ₹31 billion (approx. $459.8 million), including debt.

Unilever added that certain assets would be excluded from the transaction, including its food operations in India.

Strategic shift under new leadership

The potential deal marks the most significant strategic move so far under CEO Fernando Fernandez, who took charge in March 2025.

It follows a broader effort to streamline the company’s portfolio.

Last year, Unilever completed the spin-off and listing of its ice cream business, which includes brands such as Ben & Jerry’s and Magnum.

The company has also divested several smaller food assets, including snack brand Graze and plant-based meat business The Vegetarian Butcher.

Food business faces growth challenges

Unilever’s food division has historically been central to the company, with roots dating back to the 19th century butter trade and its formation in 1929 through the merger of Margarine Unie and Lever Brothers.

Over time, the company built a wide portfolio of food brands, including Marmite, Colman’s, and Horlicks.

However, growth in packaged food has slowed in recent years. Consumers have increasingly shifted toward fresh and perceived healthier options.

The rise of GLP-1 weight loss drugs has also weighed on demand for packaged food products.

Although the food unit remains a high-margin business, its slower growth has dragged on Unilever’s broader performance.

The company is targeting overall sales growth of 4% to 6% in the near term, and the food segment has lagged its beauty and personal care divisions.

Unilever has faced sustained investor pressure to streamline its portfolio, particularly since activist investor Nelson Peltz built a stake in the company in 2022.

Peltz has been linked to leadership changes, including the departures of former CEOs Alan Jope and Hein Schumacher.

Industry peers have already taken similar steps. Procter & Gamble exited food and pet food businesses more than a decade ago and later streamlined its portfolio following a proxy battle with Peltz in 2017.