Unilever and McCormick are in discussions regarding a potential combination of Unilever’s food business with the U.S. spice maker. Sources familiar with the matter indicate the proposed deal would offer Unilever shareholders a majority stake in the new entity and provide substantial tax benefits. Unilever, known for brands like Hellmann’s mayonnaise and Knorr stock cubes, is a global consumer goods giant. McCormick, famous for its spices and Cholula hot sauce, confirmed the talks without disclosing financial details.
The structure of the proposed deal aims to give Unilever shareholders more than 50% ownership of the combined company while avoiding capital gains taxes through a reverse Morris trust (RMT). This arrangement involves spinning off Unilever’s food business before selling it to McCormick. The potential deal, the largest under CEO Fernando Fernández, is progressing rapidly.
Similar consumer goods deals using RMT structures have resulted in the seller’s shareholders retaining significant stakes, such as International Flavors & Fragrances’ acquisition of DuPont’s Nutrition & Biosciences business in 2021. Unilever’s food unit is valued between 28 billion and 31 billion euros, including debt, according to Barclays estimates, while McCormick’s enterprise value stands at nearly $18 billion.
Unilever is working with Goldman Sachs, while Morgan Stanley and PwC are advising on the separation. Citi and Rothschild are advising McCormick. McCormick has long admired Unilever’s food business, seeing growth potential for its brands. In 2017, McCormick acquired Reckitt Benckiser’s food division, which included Frank’s RedHot hot sauce and French’s mustard.
