Unilever Considers Food Business Merger with McCormick
Unilever, the Anglo-Dutch company known for brands such as Marmite, Dove, and Hellmann’s mayonnaise, is engaged in discussions to combine its food division with McCormick, a US-based spice and seasoning producer.
Unilever, which also owns Ben & Jerry’s, Magnum, and Wall’s, is exploring options for its "highly attractive" food business. The company is valued at nearly £100 billion, with its food unit—including brands like Knorr—potentially worth tens of billions of pounds.
McCormick, valued at approximately $15 billion (£11 billion), owns brands including French’s yellow mustard, Old Bay seasoning, and Cholula hot sauce.
In a statement, Unilever confirmed,
"Unilever confirms that it has received an inbound offer for its foods business and is in discussions with McCormick & Company."
The company added,
"The board believes foods is a highly attractive business, with a strong financial profile led by market-leading brands in growing categories and is confident in the future of the foods business as part of Unilever. There can be no certainty that any transaction will be agreed."
The discussions are centered on a potential all-stock deal. Should an agreement be reached, Unilever would shift its focus primarily to beauty, personal care, and home products.
Strategic Shift Toward Personal Care
Earlier in the year, Fernando Fernández, Unilever’s chief executive, indicated the company’s intention to move away from food. Speaking at a conference in New York, he stated,
"We are really shifting our portfolio into more beauty, more wellbeing, more personal care."
Reports this week revealed that Unilever had previously explored options to combine their food operations.
Over the past decade, Unilever has divested several food brands. In 2017, it sold spreads brands such as Flora and I Can’t Believe It’s Not Butter. It also sold most of its tea business, including Lipton, PG Tips, and Tazo, prior to the 2021 listing of its ice cream business.
Additionally, Unilever has disposed of brands like The Vegetarian Butcher and the healthy snacking brand Graze.
Implications of the Deal
If the merger with McCormick proceeds, it could mark the end of nearly a century of Unilever competing against major food industry players such as Kraft Heinz, Nestlé, and PepsiCo.
The transaction would position Unilever to compete directly with leading companies in the household and personal care sectors, including L’Oréal, Beiersdorf, and Estee Lauder.
Fernández has previously outlined his medium-term goal to generate two-thirds of Unilever’s revenues from brands like Dove, Liquid IV hydration sachets, and Dermalogica skincare products.
"Urbanisation, wealth expansion, massive entry of the female gender in the labour market, low fertility rates, massive adoption of healthy lifestyles – this all plays in favour [of these categories]," he said earlier this year.
Recent Acquisition Strategy
In recent years, Unilever has explored several significant deals, including a bid for GlaxoSmithKline’s consumer health unit in 2021.
However, in December, Fernández stated that the company is now focused only on small "bolt-on" acquisitions within the beauty and personal care space.
"Transformational acquisitions are off the table. So we are not looking at that at this stage," he said.
Following the announcement of the talks, Unilever’s shares rose more than 1% in early trading on Friday.
