Will Unilever McCormick merger go ahead?
- Unilever plans $40bn Foods merger with McCormick amid investor scepticism
- Share price fell sharply and remains below pre-rumour highs
- High profile investor Terry Smith exited, criticising activist-driven strategy
- Analysts say Foods margins strong, questioning valuation uplift rationale
- Deal likely pending approvals, shaping global food industry consolidation
It’s two months since Unilever announced plans to merge its Foods business (excluding India) with American multinational McCormick & Company, in a deal worth over $40bn (€34bn). But the company is yet to convince stakeholders it’s the right decision.
Market reaction
The British multinational’s share price dropped sharply at the beginning of March, as rumours of a deal began to emerge – they fell even further when the rumours were confirmed.
Since then, confidence has remained low, with the share price sitting at just GBX 4,293.92 – well below the pre-rumour highs of GBX 5,467.00.
Then there’s the widely publicised exit of one of Unilever’s biggest investors. Financier Terry Smith sold his entire holding in the business - a stock worth hundreds of millions of pounds.
And the famed stock-picker pulled no punches when asked why he was selling his stake, accusing 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.
He also took aim at McCormick, saying he does not rate its “management and returns” highly.
Market analysts are also struggling to see the business case for a separation.
“We don’t expect a significant valuation uplift from the separation, as the Foods business was not a detraction in our view,” says Svetlana Menshchikova, associate equity analyst at Morningstar Europe. “It grows more slowly than the remaining home and personal care business, but carries higher operating margins and, we believe, requires less investment to remain competitive.”
Foods is among Unilever’s strongest performers, generating an average operating margin of 22% in 2024-2025 – matching personal care (22%) and outperforming beauty and wellbeing (19%), and home care (15%).
Despite this, Unilever says it remains committed to the merger with New York-listed McCormick, 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.”
Employee reaction
It’s not just investors who are struggling to see the benefits of the merger.
Unilever’s employees are similarly sceptical about the move, with chairman of the Unilever European Works Council (UEWC), Hermann Soggeberg, releasing the following statement:
“On 31 March, the UEWC was officially informed for the first time of Unilever’s intention to combine its Foods business with McCormick. At that point, the strategic decision had already been taken. From the UEWC’s perspective, employee representatives were not involved at an early stage. A genuine, open consultation – including the opportunity to develop and present alternatives before the decision was made – did not take place."
The European Coordinating Committee (ECC) later expressed “serious concerns” over renewed uncertainty for employees, following years of restructuring, which included the slashing of 7,500 jobs in 2024.
All this begs the question – will Unilever proceed with the deal?
Will the Unilever McCormick deal go ahead?
Unilever remains firm in its plans to go ahead with the merger but if the share price remains low and more shareholders move to exit, we may see the board reconsider.
Having said that, Menshchikova says Morningstar believes the deal is “proceeding with high probability”.
“The board voted unanimously and closure is essentially contingent on regulatory approval, where we see limited risk of the deal not being approved,” she explains.
In other words, completion looks likely, but is far from certain.
Moreover, Menshchikova highlights the deal is not a full departure from Foods, at least for now. “Unilever will retain around 65% of the combined Unilever Foods and McCormick entity, which is expected to generate $20bn (€17.1bn) in turnover.
Reshaping Big Food
If it does proceed, the tie-up between Unilever and McCormick would mark one of the most significant reshaping moves in Big Food, creating a $20bn powerhouse spanning multiple sectors.
It would also underscore a broader industry shift towards portfolio simplification and scale-driven consolidation.
If, however, the decision is reversed, it would reinforce investor appetite for diversified, cash-generative food portfolios.
