20 March 2026
If you are covering the news that Unilever is in talks with McCormick about a potential sale or merger of its food business, please see the following comment from Chris Beckett, consumer staples analyst at Quilter Cheviot:
“Unilever has confirmed it is in talks with McCormick about a potential sale or merger of its food division, though has made no promises of a deal. While both companies would see strategic logic in such a transaction, the mechanics of combining assets of such different scales would be far from straightforward. Unilever has spent many years gradually shifting its focus towards faster growing, higher margin household and personal care products, but the slow progress towards a pure play company has frustrated investors.
“The food business remains a sizeable operation and is worth around 25% of Unilever’s value, generating around $15bn in revenue and $3.4bn of earnings before interest and taxes, with Hellmann’s and Knorr products accounting for a combined 60% of this. This dwarfs McCormick’s operations, which focuses on spices and condiments.
“This gap in scale, alongside McCormick’s present gearing of 2.7x, means any deal would likely be complex. To be tax efficient, it is thought that Unilever's shareholders would have to own the majority of the combined business which would create a substantial stock overhang.
“For Unilever, the loss of food would be margin dilutive at the outset, but it could free up capital for expansion in beauty or over the counter health, where management sees greater long term potential. Even so, investors will be wary of execution risk in anything other than a clean sale.”
