MW McCormick's stock having worst month in 46 years, as investor frown on Unilever Foods deal
By Tomi Kilgore
The deal includes $29.1 billion in McCormick's stock and $15.7 billion in cash, but Unilever and its shareholder will own 65% of the combined company
McCormick's stock was headed for its worst month in 46 years after the spice maker announced terms of a $44.8 billion deal to combine with Unilever's foods business.
Shares of McCormick & Co. turned sharply lower Tuesday, and were headed for their worst month in nearly five decades, as investors frowned on the terms of the spice maker's planned $44.8 billion combination with Unilever's foods business.
The cash-and-stock deal is being structured as a Reverse Morris Trust, in which the so-called purchaser is technically being acquired. McCormick $(MKC)$ is offering the equivalent of $29.1 billion in stock and $15.7 billion in cash for the deal, but will own just 35% of the combined company; Unilever will own 9.9% of the company and Unilever shareholders will own 55.1%.
Unilever $(UL)$ (UK:ULVR) is the parent of the Hellmann's mayonnaise and Knorr soup brands.
The deal comes as McCormick, which sells French's mustard, Old Bay seasoning and Frank's RedHot sauces along with its spice range, was struggling as consumers' spending and eating habits are in flux.
Investors first appeared to warm to the deal, as well as to the company's earnings report, which was also released early Tuesday. The stock initially rose as much as 5.5% in the premarket after Unilever confirmed a Wall Street Journal report that a deal was in the works, but then took a dive after the deal was actually announced.
In recent morning trading, the stock dropped 6% toward its lowest close since June 2018. It has also tumbled 28.9% in March, which would the biggest one-month selloff since the record monthly drop of 39.5% in September 1980.
Unilever's U.S.-listed shares fell 4.5% on Tuesday. They have slumped 22.3% in March, which would be the worst month since it sank a record 24.7% in July 1975.
The S&P 500 index SPX has slipped 5.9% in March.
Deutsche Bank analyst Steve Powers wrote in a note before the deal was announced that while the strategic fit was "theoretically strong," it also carries "clear and sizable execution risks," as McCormick tries to integrate the larger Unilever business.
Powers noted that McCormick has a positive track record in integrated purchased businesses, such as Reckitt Benckiser's (UK:RKT) food division purchased in 2017, but the scale of the Unilever deal represents "a substantially greater order of magnitude."
McCormick CEO Brendan Foley said the "transformative" combination with Unilever Foods accelerates and reinforces its focus on flavor.
"The Unilever Foods business is one we have long admired, with a portfolio that complements our existing business, capabilities and long-term vision," Foley said. "Together, we will be better positioned to accelerate growth in attractive categories."
Upon closing of the deal, which is expected to occur by mid-2027, Foley is expected to remain CEO, while Unilever will appoint four of the 12 members of the combined company's board of directors.
McCormick also reported Tuesday that net sales for the quarter to Feb. 28 grew 16.7% from a year ago to $1.87 billion, which was well above the average analyst estimate compiled by FactSet of $1.79 billion. The margin of the sales beat was the widest since the second quarter of 2021.
The results included 25% sales growth in the consumer business to $1.15 billion, and a 6% increase in flavor solutions sales to $729 million.
Adjusted earnings per share, which excludes nonrecurring items, rose to 66 cents from 60 cents, to beat the FactSet consensus of 59 cents.
Looking ahead, the company affirmed its previous guidance ranges for sales growth of 13% to 17% and for adjusted EPS of $3.05 to $3.13.
-Tomi Kilgore
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March 31, 2026 10:16 ET (14:16 GMT)
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