Unilever has confirmed Tuesday to be in “advanced discussions” aimed at combining most of its food activities with those of the American company McCormick, an operation that would allow the Anglo-Dutch consumer goods giant to focus on the more promising sector of hygiene and beauty.
In a statement released in the morning, the group emphasizes that work is underway to agree and finalize a “strategic” transaction and that an agreement could be reached as early as today, even though there is no guarantee that these negotiations will be successful. These details emerge as Unilever had acknowledged, about ten days ago, the existence of discussions to merge its food subsidiary with McCormick, as previously reported by the Wall Street Journal.
If a transaction were to materialize, it is currently envisioned to take the form of a combination of Unilever Foods, excluding certain parts of the food portfolio such as the activity in India, with the Maryland-based group, which owns among others the Ducros spices and Vahiné dessert preparations.
The transaction would be carried out with a consideration consisting mainly of McCormick shares, as well as an initial cash component of about $15.7 billion. Under the merger, Unilever and its shareholders would hold 65% of the combined entity.
The transaction would be executed through a Reverse Morris Trust, a mechanism intended to be exempt from US federal tax for Unilever and its shareholders.
Favorable reactions from some analysts On Euronext Amsterdam, Unilever’s shares were trading relatively stable on Tuesday morning (+0.8%), illustrating the differing views of investors on the relevance of the operation.
At Oddo BHF, it is noted that the project would allow Unilever, by divesting most of its nutrition activities (excluding India), to transform into a “pure player” specializing in hygiene, personal care, consumer health, and beauty, primarily centered around its leading brands Axe and Dove.
“The approximately $16 billion in cash that could be obtained in the operation would give Unilever the opportunity to strengthen its operational presence in the market through an acquisition,” highlights the brokerage firm.
The private bank considers the British companies Haleon and Reckitt as potentially interesting targets due to the geographical and product complementarity they offer. Oddo also mentions the Spanish company Puig, currently coveted by Estée Lauder, due to the interest shown by Unilever’s new CEO, Fernando Fernandez, in the “prestige” beauty segment. This segment is currently the main growth driver of the group.
“Whatever happens, merger and acquisition (M&A) activities are expected to continue,” predicts Oddo.
In the face of changing consumer behaviors, who are more careful with their food purchases due to inflationary pressures and health concerns while maintaining their indulgent beauty purchases, transactions in the consumer goods sector seem to be picking up momentum at the beginning of 2026.
From a financial standpoint, the most significant aspect is that Unilever is now on the verge of ending 26 years of conglomerate structure that had weighed on its stock price.
“In this light, we see a clear potential for revaluation towards a 20x PER in 12 months, compared to the current 16x,” he notes, maintaining his “outperform” opinion on the stock.
According to ING analysts, the $15.7 billion raised in the transaction – almost 11% of the group’s market capitalization – would represent a “significant” amount if used for share buybacks.
Unilever currently has a market capitalization of over 115.6 billion euros as of Tuesday morning.
In New York, McCormick is valued at $14.4 billion, which is around 12.5 billion euros.
An operation that does not convince RBC This significant difference catches the attention of RBC teams, who are far from impressed by the operation in a note released this morning.
“The problem with the deal that is being considered, in our view, lies in the fact that the entity resulting from the operation – with Unilever holding about 65% – would be much less concentrated than in the past,” points out the Canadian broker.
“This contradicts the argument previously put forward by Unilever to retain its food business, namely its strong focus on two brands (Hellmann’s and Knorr) that made it a valuable asset within the group,” he argues.
“We find it hard to see the logic of now holding a partial stake in a less concentrated business,” continues RBC.
“If this interpretation is confirmed (…), Unilever would end up with a strengthened minority stake in a business that is even more complex, rather than with full control of a business dominated by two key brands,” adds the analyst. “At this stage, this does not seem particularly appealing.”
