Unilever to combine food business with McCormick in $45B deal

• Unilever said it reached an agreement to combine the majority of its food business with spice maker McCormick in a $44.8 billion deal creating a global condiments giant.
• McCormick will pay $15.7 billion in cash and the equivalent of $29.1 billion in shares for Unilever’s food portfolio, which includes Hellman’s mayonnaise and Knorr sauces and seasonings. The deal excludes Lipton’s ready-to-drink line and Buavita juices, as well as Unilever’s lifestyle nutrition assets and food operations in India, Portugal and Nepal.
• The transaction will create a combined company under the McCormick name with estimated $20 billion in revenue. The deal is expected to be completed in mid-2027, the companies said.

Unilever’s food segment is valued at roughly double the size of McCormick’s entire business, and the combination is an ambitious play to create a global condiments and seasonings company with a stable of well-known brand names, from Cholula to Marmite, Food Dive reports.

“Our ability to serve consumers with what they want will be even greater when combined with global icons like Hellmann’s and more,” McCormick CEO Brendan Foley said on a media call following the announcement.

Unilever shareholders will receive 55.1% of combined company equity and the CPG giant will retain a 9.9% stake, which will be sold down over time. The combination is expected to generate $600 million in annual savings by the third year.

McCormick will maintain its global headquarters in Hunt Valley, Maryland, and create a secondary listing in Europe. It will also establish an international headquarters in the Netherlands, where Unilever has a long-standing presence.

Foley will remain CEO of McCormick and executives from both companies are expected to serve in key leadership roles. Unilever will also appoint one-third of the board.

The transaction also marks Unilever’s retreat from the food business, allowing the company to focus on the more profitable personal goods sector. Last year, Unilever spun off its ice cream business into the Magnum Ice Cream Company, which owns Talenti, Klondike and Ben & Jerry’s.

“The combination with McCormick allows both companies to be the best that they can be, to focus and scale businesses, paving the way for higher growth, stronger returns and more value creation,” Unilever CEO Fernando Fernández said on the media call.

McCormick has identified M&A as a key opportunity to grow beyond its iconic red-and-white spice jars and enter into fast-growing flavor and seasoning categories, such as hot sauce, mustard and more. The company purchased Frank’s RedHot sauce and French’s mustard as part of a $4.2 billion deal for Reckitt Benckiser’s food business in 2017.

Foley said McCormick was able to reinvest in French’s and other acquired brands to create “meaningful growth,” a strategy it intends to follow with Unilever’s food business. The transaction with Unilever is the largest deal in McCormick’s history.

“We see a tremendous opportunity across our combined portfolio to take high growth potential brands like Cholula hot sauces and Maille mustard and accelerate growth and innovation,” Foley said.