LONDON, April 2, 2026, 13:02 BST
Unilever PLC is doubling down on beauty and home care after agreeing on March 31 to combine its foods arm with McCormick in a $65 billion transaction, a move that would leave its shareholders with a majority stake in the merged company. The deal has already drawn skepticism from investors and labor representatives as the maker of Dove and Hellmann’s tries to separate a slower-growing food arm. 1
The timing matters. Chief executive Fernando Fernandez is trying to turn Unilever into a tighter consumer-products company after repeated attempts by past chiefs to reshape the portfolio, even as the group pauses hiring for at least three months and keeps pushing through an 800 million euro cost-cutting program. That leaves little room for a long, messy carve-out. 2
Unilever said the business being separated is valued at about $44.8 billion. Structured as a Reverse Morris Trust — a spin-off-and-merger format that can reduce U.S. tax — the deal would bring in $15.7 billion in cash, leave Unilever shareholders with 55.1% of the merged company and Unilever with 9.9%, and help support 6 billion euros of buybacks; the combined company is targeting $600 million of annual cost savings by year three. 1
Fernandez called the move “the right step at the right time” to build a “simpler, sharper, higher-growth Unilever.” After the split, Unilever says it would have about 39 billion euros of revenue concentrated in beauty, wellbeing, personal care and home care, while the merged food business would have about $20 billion in 2025 revenue and would keep the McCormick name, its Hunt Valley, Maryland, headquarters and New York listing. 3
Food is not a side business. Unilever’s broader food division generated 12.9 billion euros of sales last year and more than a quarter of group revenue, though the transaction excludes businesses in India, Nepal and Portugal and several other assets. Growth, not margin, was the drag: food sales rose 2.5% last year, below Unilever’s 4% to 6% target, as shoppers shifted toward fresher food and cheaper store brands. 2
That is the case supporters make. Artisan Partners’ David Samra said the slimmer group should be able to “more effectively manage” its core personal care and home brands, while Ninety One’s Will Nott said the separation could win Unilever a higher valuation over time because food had long left it trading below L’Oréal and Procter & Gamble. 4
McCormick is pitching the other side of the trade. Chief executive Brendan Foley said the enlarged company would “continue to flavor calories while others compete for them”, betting demand for spices and sauces can hold up even as weight-loss drugs reshape eating habits and the U.S. pantry market matures. The deal also gives McCormick wider reach in emerging markets and restaurant and catering channels. 5
But the deal could still hit trouble. Unilever shares fell 7% on March 31 after the announcement, and Quilter Cheviot’s Chris Beckett said “the market, so far, has not reacted well”. Former FTC Chair Bill Kovacic said the merger was likely to face close U.S. antitrust scrutiny, while Unilever’s European works council — which represents nearly 20,000 employees in Europe and Britain, including about 4,800 regional food staff — warned job losses could lead to strikes; RBC analysts also called the structure “hardly a clean exit” because Unilever investors would still own a large block of the food business while waiting for a mid-2027 close. 6
For Fernandez, the transaction is meant to finish a turn that began with Unilever’s ice cream separation and move the group closer to the shape of a focused beauty and household-goods rival. Between now and mid-2027, he still has to show investors that the logic of the deal can survive the mechanics. 3
