McCormick to merge with Unilever's Foods Business, forming a leading global flavor-focused company

McCormick & Company, Incorporated (NYSE: MKC) ("McCormick") and Unilever PLC (LSE: ULVR / NYSE: UL) ("Unilever") today announced that they have reached an agreement to merge McCormick with Unilever's Foods business, excluding India and other excluded businesses1 ("Unilever Foods"), resulting in a global flavour leader in attractive and high-growth categories with approximately $20 billion in combined fiscal year 2025 revenue.

Under the terms of the agreement, Unilever and its shareholders are expected to receive shares equal to 65.0% of the fully diluted combined-company outstanding equity, or $29.1 billion3 based on McCormick's one-month volume-weighted average price of $57.84.4. Unilever will also receive $15.7 billion in cash, subject to certain closing adjustments. This suggests an Enterprise Value for Unilever Foods of roughly $44.8 billion, or approximately 13.8 times fiscal year 2025 EBITDA.5. In addition, this indicates an enterprise value for McCormick of about $21.0 billion, or approximately 13.8 times fiscal year 2025 EBITDA.6

Following the deal, Unilever shareholders are expected to possess 55.1%, McCormick shareholders will control 35.0%, and Unilever is expected to own 9.9% of the fully diluted combined-company outstanding equity. The transaction is not expected to result in U.S. federal income tax for Unilever or its shareholders, which will offset some of the transaction's overall tax expenses.

The merger combines two industry-leading companies with complementary worldwide footprints and portfolios of renowned brands in herbs, spices, seasonings, cooking aids, condiments, and sauces. The combined firm is projected to gain from increased worldwide reach, scale in retail and foodservice channels, and more resources to engage in innovation, brand development, and global distribution.

Brendan Foley, Chairman, President, and CEO of McCormick, stated, "This transformative combination accelerates McCormick's strategy and reinforces our continued focus on flavour." Unilever Foods is a company we have long respected, with a portfolio that complements our current operations, competencies, and long-term goals. Together, we will be better positioned to accelerate growth in promising categories. This combination will result in a varied flavour leader with a strong growth profile, distinguished by its emphasis on flavouring calories while others compete for them."

"Unilever Foods' global portfolio of strong brands, combined with our proven expertise in insight-driven brand-building and integration, will allow us to deliver flavour in new and exciting ways for more consumers, resulting in significant growth across the portfolio and value for all stakeholders. Integrating two global organisations of this size necessitates rigorous execution, and we are sure that our clear integration roadmap, experienced teams from McCormick and Unilever, external consultants, and strong relationship will allow us to maximise the potential of this opportunity. McCormick is the ideal partner for Unilever Foods' brands and workers, and our common culture and values will strengthen our partnership. We are delighted to welcome their tremendous skills and global expertise within our Power of People culture."

Unilever's CEO, Fernando Fernández, stated, "This deal is another crucial step in honing our portfolio and driving our approach towards high-growth categories as a €39 billion pureplay HPC company with a proven sector-leading growth potential. We are unleashing trapped value through a growth-driven separation of Foods, resulting in a scalable, global flavour powerhouse. By merging Unilever Foods' iconic leading brands and global reach with McCormick's great portfolio, category expertise, and skills, we will create a focused, high-quality business with tremendous top-line growth and wealth creation potential."

"This is a combination based on strong strategic and cultural alignment, creating new prospects for our employees while ensuring that our Foods brands continue to grow as part of a global flavour leader. "Our retained ownership stake reflects our belief in the combined company's strength and future prospects."

Unilever Foods' global portfolio includes flavouring and cooking aids, condiments, sauces, and other food products, lead by legendary brands Knorr and Hellmann's, which account for over 70% of sales. Knorr, a household name in more than 90 countries, serves over five billion people globally, while Hellmann's, one of the world's largest mayonnaise brands, reaches customers in over 65 nations. Along with these worldwide power brands, Unilever Foods' portfolio offers a diverse range of local brands from EMEA, Latin America, and APAC. Over the last two years, the company's underlying sales CAGR has been at 2.8%, driven by continuous volume growth.7

Unilever dishes' assets complement McCormick's portfolio of legendary brands, which includes McCormick, French's, Frank's RedHot, Cholula, Stubb's, OLD BAY, and Lawry's, as well as its 137-year history of flavouring dishes for all cuisines and trends. In addition to retail and branded foodservice offerings, McCormick develops custom flavors and condiments for customers as well as its own products within its Flavor Solutions segment.

Combines two high-performing, complementary businesses with significant growth opportunities

• Advances growth in attractive categories: Unilever Foods and McCormick bring together a portfolio of global, well-invested iconic leading brands, breakthrough brands and local favorites across developed and emerging regions. The combined company will have a deepened focus on flavoring and enhancing foods across categories with attractive consumer tailwinds, including increased protein consumption and cooking at home.

• Unlocks revenue synergies between McCormick and Unilever Foods businesses: The combination is expected to open up new regions, flavours, innovation, and consumption opportunities in both retail and foodservice channels across the merged firm. McCormick's brands will benefit from increased access to high-growth countries in EMEA, Latin America, and APAC thanks to Unilever Foods' substantial infrastructure and distribution. Unilever Foods' brands will have a better strategic path to growth in North America, where McCormick has a greater profile and expertise.

• Creates a leading global foodservice platform: The merged firm will benefit from a combined foodservice platform with extensive global distribution capabilities and customer familiarity, bolstered by McCormick's front-of-house and Unilever Foods' chef-led back-of-house strengths. In fiscal year 2025, the integrated foodservice platform will generate roughly $6 billion in combined business sales.8

• Combines distinct technical expertise: McCormick is dedicated to staying a flavor-focused company, and will integrate and exploit Unilever Foods' technology strengths, R&D facilities, and manufacturing footprint. The combined firm and its clients will benefit from a broader range of flavour insights, advanced technology, and technical knowledge across R&D, marketing, and supply chain to accelerate innovation and product development.

• Builds on McCormick's history of accretive M&A and brand expansion: McCormick has a successful track record of integrating major flavour brands, investing in and accelerating their development, including Lawry's, Cholula, French's, and Red Hot. In several examples, the McCormick team exceeded growth, synergies, and earnings expectations while increasing brand equity and consumer growth for the brands.

• Unites two culturally aligned, purpose-driven organisations: The combination is built on excellent personnel, technology, and skills from two successful organisations with complementary regional experience. McCormick and Unilever are committed to conducting business with strong ethical standards and social responsibility, and these values will continue to guide operations at the merged firm.

The attractive financial profile positions the company for continued volume-driven growth and value creation

• Positioned for rapid expansion in flavour categories with structurally increasing demand: Shareholders in the merged firm are likely to gain from the merger of two high-performing businesses that have regularly achieved volume growth. Unilever Foods and McCormick expanded at a combined rate of nearly 2.4% in 2025, well above their competitors in these sectors.9 The combined firm is expected to grow at a 3 to 5% rate in year three, driven by higher investment and volume-driven revenue prospects. The combined company's portfolio will be focused on categories that benefit from emerging consumer trends, such as increased desire for flavours at home and away from home, as well as those that support rising demand for protein and produce.

• Promotes wealth generation through the realisation of significant synergies: The merged firm anticipates achieving roughly $600 million in run-rate annual cost synergies, net of growth reinvestments. These cost synergies are expected to be realised over a three-year timeframe, with around two-thirds of them realised by the end of year two, driven by procurement, manufacturing, and SG&A. One-time costs to achieving these synergies are expected to be over $300 million. Approximately $100 million incremental cost and revenue synergies will be reinvested to further drive growth.

• Enables an attractive and sustainable margin profile, encouraging resilience and allowing for reinvestment: McCormick and Unilever Foods had a combined adjusted EBITDA of $4.7 billion in 2025, with an operating income margin of around 21%.10 Including predicted run-rate synergies, the merged company's operating income margin for the third year after close is expected to be between 23 and 25%.

• Strengthens long-term balance sheet stability and commitment to shareholder returns: The combined firm is expected to generate significant cash flow from operations, presenting a clear path to reduce net leverage from an estimated 4.0x or less at closing to 3.0x within two years of closing. Furthermore, both McCormick and Unilever have long-standing commitments to shareholder returns, with dividend payment percentages of around 60%. The combined firm intends to continue paying a dividend in line with its tradition.

• Integration planning is a top priority: Both organisations have already begun considerable preparations for combining two global organisations of this size. The firms have already developed a rigorous integration roadmap, which includes experienced McCormick and Unilever team members as well as external experts. The merged business is well positioned to carry out the integration effectively and realise the full potential of the merger.

Leadership, Governance, Listings, and Headquarters

Brendan Foley is likely to remain Chairman, President, and CEO of McCormick after the acquisition closes, while Marcos Gabriel will remain Executive Vice President and Chief Financial Officer. Executives from both companies will serve in key leadership roles. Upon completion, Unilever will appoint four of the twelve members of the combined company's Board of Directors. In addition, one Unilever executive is expected to serve as one of the four directors appointed for two years to support a successful integration.

McCormick will keep its Global Headquarters in Hunt Valley, Maryland, as well as its International Headquarters in the Netherlands. Unilever Foods has a long history in the Netherlands, where it has world-class R&D capabilities to support its deep sector expertise. Management sees this expertise as a core strength of the combined company, and it expects to maintain a significant presence in the Netherlands. The combined firm intends to list secondary stock in Europe to match Unilever's current global shareholder base.

As part of a larger, flavor-focused firm, employees from both businesses will have access to more career advancement and professional development possibilities.

Transaction Details

Under the terms of the agreement and upon closing of the transaction, McCormick will issue a proportionate mix of McCormick's existing voting and non-voting common stock equating to 65.0% of the fully diluted combined-company outstanding equity to Unilever and Unilever's shareholders, which is expected to result in current Unilever shareholders owning 55.1% of each class of the fully diluted combined company's equity and current McCormick shareholders owning 35.0% of eac Unilever expects to possess 9.9% of each class of fully diluted combined company shares and intends to sell down gradually. Under the terms of the agreement, Unilever will also receive a one-time cash payment of $15.7 billion, subject to certain closing adjustments.

The split of Unilever's Foods business from the Unilever Group is expected to be structured as a Reverse Morris Trust transaction, with no U.S. federal income tax consequences for Unilever or its stockholders. The deal has been unanimously authorised by the McCormick and Unilever boards of directors.

Following the deal, the combined company's net leverage is estimated to be 4.0x or less. The combined company intends to maintain a strong investment grade credit rating and return to 3.0x leverage within two years after closing.

McCormick has received $15.7 billion in committed bridge financing from Citigroup Global Markets Inc., Goldman Sachs Bank USA, and Morgan Stanley Senior Funding, Inc., and plans to fund the cash component of the purchase price with cash from its balance sheet and proceeds from new debt issuance.

The transaction is scheduled to completion by the middle of 2027, subject to McCormick shareholders' approval, receipt of requisite regulatory approvals, and other usual closing circumstances. Prior to the transaction's closure, a works council consultation will take place.

Source: McCormick and Company, Inc.