London, May 14, 2026, 10:06 BST
- Unilever’s shareholders gave the nod to all 21 resolutions at the AGM, covering board re-elections as well.
- Fundsmith, managed by Terry Smith, has exited its longstanding position in Unilever, citing the McCormick food deal as the reason for the sale.
- London shares slipped in the morning, with investors digesting the portfolio overhaul.
Unilever PLC’s board secured wide support from shareholders at its annual meeting, yet debate flared up again over the proposed merger of its food unit with McCormick & Co. The issue gained steam after veteran fund manager Terry Smith exited his stake in the maker of Dove and Vaseline.
Shareholders gave the green light to all 21 resolutions put forward at the annual general meeting on May 13, according to a regulatory filing. Among the directors re-elected: Chief Executive Fernando Fernandez and activist investor Nelson Peltz, who secured backing from 98.35% of voting shareholders. Roughly 73% of eligible share capital participated in most of the votes.
Timing is key here. Unilever is in the middle of pushing a $44.8 billion foods spin-off—one of its boldest moves in recent memory. If it goes through, the business shifts its center of gravity to beauty, wellbeing, personal care, and home care. For management, the split is shaping up as a referendum on investor confidence after years of reworking the portfolio.
Smith, who runs Fundsmith as founder and chief investment officer, told City AM his fund exited its Unilever stake, citing the firm’s move away from “promised operational focus” and toward “activist-driven break-ups.” He took aim as well at the decision to shift the food business to McCormick—“whose management and returns we do not rate highly”—according to the report. City AM
Unilever told City AM its board signed off on the deal unanimously, calling it “in the best interests of Unilever’s shareholders.” The company pointed out that under UK regulations, it’s up to the board to approve such transactions. City AM
The deal unveiled in March gives Unilever and its investors 65% of the combined food giant’s fully diluted equity—valued at $29.1 billion, using McCormick’s one-month volume-weighted average price. There’s also $15.7 billion in cash headed to Unilever. Once the dust settles, Unilever shareholders would control 55.1% of the merged entity, McCormick shareholders get 35%, with Unilever retaining a direct 9.9% stake.
This deal uses a Reverse Morris Trust, a structure in the U.S. that allows a company to spin off a division and combine it with another firm, aiming for tax efficiency. According to Unilever, the transaction doesn’t require a shareholder vote under UK listing rules—a detail that’s frustrated some investors, since they won’t have a direct say on the separation of the food business.
Unilever shares slipped 0.42% to 4,217 pence in London morning trade, Investors Chronicle data showed at 09:50 BST. The price still held 3.66% above the 52-week low hit on April 1, right after the food deal went public.
Fernandez is framing the deal as a way to focus Unilever on categories with more momentum. Back in late April, Unilever posted underlying sales up 3.8% for the first quarter, driven by 2.9% growth in volumes. The company also reiterated its 2026 target: underlying sales growth sticking to the lower end of its 4% to 6% multi-year range.
Unilever now lines up more squarely with Procter & Gamble, L’Oréal, and Reckitt across household, personal care, and beauty products, instead of being weighed down by a sluggish food business. Last month, Reuters noted that Unilever’s forward price-to-earnings ratio lagged behind L’Oréal, P&G, Nestlé, and Danone. Ninety One’s Will Nott told Reuters there’s “clearly re-rating potential,” though he cautioned, “it won’t happen overnight.” Reuters
McCormick projects the merged food giant will generate roughly $20 billion in revenue for 2025, with leadership staying in McCormick’s hands. The new group’s international headquarters are set for the Netherlands, and there’s a secondary European listing on the table. “This deal strengthens our flavour-forward strategy,” said Chief Executive Brendan Foley. Unilever’s Fernandez described the move as “unlocking trapped value” by spinning off the business. McCormick Company, Inc.
Risks remain significant. The transaction hinges on McCormick shareholder sign-off, several regulatory green lights and input from the works council. Closing is targeted for mid-2027. Unilever has flagged that approval setbacks, unexpected delays, or disappointing synergies could undermine the deal’s value. The merged entity is projected to kick off with net leverage at 4.0 times or below, aiming to bring that down to 3.0 times within two years.
Sustainability’s become a sticking point, too. Certain investors want the merged food operation to stick with Unilever’s deforestation-free sourcing and traceability guidelines. Vemund Olsen, senior analyst at Storebrand, told Reuters the firm intends to press for guarantees that the new entity won’t abandon, and ideally will strengthen, top-tier practices. As You Sow’s Cailin Dendas flagged a warning: stepping back from sustainability could spell trouble for shareholders.
Fernandez has the AGM vote in his pocket for now, which buys him some flexibility. The real challenge starts here: he’ll need to show that cutting back in foods, holding the line on margins, and fighting for share in beauty and personal care can drive growth quickly enough to make up for losing a well-known, cash-spinning operation.
