Unilever and McCormick & Company have agreed a $65 billion (€56.5 billion) deal to combine their food businesses, creating a global food giant.
The merger will be done through a Reverse Morris Trust (RMT), allowing Unilever to spin off its food unit and merge it with McCormick, owner of Cholula. The structure offers tax benefits and is expected to be the largest of its kind involving a European firm, according to Rothschild & Co.
Unilever shareholders will own 65% of the new company. The group will also receive $15.7 billion (€13.7 billion) in cash. The deal values Unilever’s food business at about $45 billion and McCormick at around $21 billion.
The move is the biggest yet under CEO Fernando Fernandez, as the company shifts focus to faster-growing areas like beauty and personal care.
“There is logic in a disposal of the foods business where volumes have been muted over the past years,” said Harsharan Mann of Aviva Investors. He added that the RMT model is “sensible,” noting that Procter & Gamble has used similar structures before.
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Unilever has faced pressure to simplify its business. While its food brands remain profitable, growth has been slower than in other divisions.
That pressure increased after investor Nelson Peltz took a stake in 2022.
The company also confirmed a temporary global hiring freeze due to economic and geopolitical uncertainty.
“Macro economic and geopolitical realities, especially in the Middle East conflict… bring some significant challenges for the coming few months,” said Fabian Garcia in an internal memo.
Some investors remain cautious.
“The direction of travel makes sense… but at this stage we need to see the details,” said Tineke Frikkee of W1M.
Unilever said talks are ongoing and warned there is no certainty the deal will be finalised.