Unilever McCormick deal investor backlash – summary
- Unilever planning $40bn Foods merger with McCormick
- Shares fell sharply after announcement and have not yet recovered
- Major investor Terry Smith has sold entire stake citing activist strategy concerns
- Investors question industrial logic as broader food sector break-ups face scrutiny
- Deal outcome may shift if share pressure and shareholder exits continue
It’s been just six week since British multinational Unilever announced plans to merge its Foods business (excluding India) with American sauce and spice brand McCormick & Company, but the cracks are already starting to show.
The deal, worth over $40bn (€34bn), was positioned as a great opportunity for both companies, with CEOs Fernando Fernandez (Unilever) and Brendan Foley (McCormick) expressing their confidence in the new partnership.
Yet financial markets and company employees have proven less enthusiastic, causing Unilever shares to plummet, dropping £3.29 (€3.79) per share within 24 hours of the announcement.
And they’ve yet to show any signs of a recovery, with investors continuing to voice concerns over the amount of debt being loaded onto the merged entity.
Now, things are going from bad to worse, as one of Britain’s best-known fund managers, who also happens to be one of Unilever’s biggest investors, has dumped his entire stake in the business.
Shareholder abandons Unilever
Widely regarded as a star stock-picker, financier Terry Smith, has sold off his entire holding in Unilever - a stock worth hundreds of millions of pounds.
The fund manager has accused the CPG of abandoning its traditional shareholders in favour of activist-driven deals.
“We have sold out of Unilever because the company appears to have abandoned its promised operational focus in favour of activist-driven break-ups,” Smith told media outlet City AM. In particular Smith highlights the sale of its Foods business to McCormick, “whose management and returns” he does “not rate highly”.
The deal between Unilever and McCormick was reportedly spearheaded by activist investor Nelson Peltz.
Despite this, Unilever remains certain the merger with New York-listed McCormick is the right move, making the following statement:
“This transaction enables a growth-led separation of Foods at an attractive valuation, creating two stronger businesses, both positioned to win in their categories. It was a unanimous decision by the Board, which firmly believes it is in the best interests of Unilever’s shareholders. We value open dialogue with our shareholders and will continue our engagement to explain the benefits of the transaction.”
Whether Unilever will maintain this position going forward remains to be seen. If the share price remains low and other major shareholders move to exit, we may see attitudes towards the merger shift.
Big Food’s break‑up strategy
Unilever’s situation reflects wider strategic shifts across the food sector
From Kraft Heinz’s move to split in two to Kellogg’s separation into WK Kellogg (now owned by Ferrero) and Kellanova (now part of Mars, Inc.), the industry has been focusing heavily on streamlining operations to boost growth.
But recent market reactions suggest investors are becoming more selective, placing greater emphasis on the underlying industrial rationale behind these moves.
Terry Smith’s exit highlights a degree of investor caution around the balance between strategic transformation and long‑term consistency.
It suggests that, while restructuring remains a valid tool, it’s no longer viewed as a guarantee of value creation.
