Unilever is negotiating a separation of its food business via an all-stock transaction, with plans to merge it with spice producer McCormick. Following the spin-off, Unilever will focus on its beauty, personal care, and home care categories.
McCormick, headquartered in Maryland and known for its spice products, is recognizable by its red-capped spice jars and square seasoning tins. Its portfolio also includes brands such as French's mustard, Old Bay seasoning, and Cholula hot sauce. The company is scheduled to release its first-quarter earnings on March 31.
After The Wall Street Journal first reported the news, both companies confirmed the talks on Friday. This major strategic shift by Unilever continues the industry trend of consumer goods giants streamlining their operations. Unilever, which produces Dove deodorant and Hellmann's mayonnaise, would, post-spin-off, concentrate on beauty, personal care, and home care segments.
McCormick currently has a market capitalization of approximately $148 billion, while Unilever is valued at nearly $1.4 trillion. Unilever's food unit, which includes brands like Knorr soup and seasoning products, could be valued at tens of billions of dollars.
According to people familiar with the matter, if negotiations proceed smoothly, the all-stock deal could be finalized within weeks, though the specific transaction structure has not yet been disclosed.
The consumer goods industry, once dominated by large, diversified conglomerates, has seen several companies announce plans to break up their business structures in recent years. Unilever itself has been actively managing its portfolio over the past few years. In 2021, it made an unsuccessful bid for GlaxoSmithKline's consumer health unit. Last year, it spun off its ice cream business into a separate entity named Magnum Ice Cream, which has a market value of around $80 billion and owns brands including Breyers, Ben & Jerry's, and Talenti gelato.
Bloomberg reported earlier this week that Unilever was considering a separation of its food division. Unilever CEO Fernando Fernandez has clearly stated the company's intention to focus on beauty and personal care, mentioning in December plans for small, "bolt-on" acquisitions in that sector. Fernandez noted at the time that the company was not considering large, transformative acquisitions and had no such plans.
Activist investor Nelson Peltz, whose Trian Fund Management took a significant stake in Unilever, joined the company's board in 2022. Peltz, who previously served on the board of Unilever rival Procter & Gamble, has a history of pushing for spin-offs and restructurings at large corporations. His team was involved in the merger and subsequent split of Dow and DuPont, advocated for streamlining at General Electric, and previously lobbied, unsuccessfully, for PepsiCo to separate its food and beverage businesses.
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