LONDON, March 31, 2026, 12:06 (BST)
- Unilever is deep in talks with McCormick over a deal for the majority of its Foods business, with both sides possibly finalizing terms as soon as Tuesday.
- There’s roughly $15.7 billion in cash on the table, according to the outline, with Unilever and its shareholders set to walk away holding 65% of the merged company.
- Unilever clarified its India food business isn’t part of the possible deal, and added there’s still no guarantee any agreement will happen.
Unilever on Tuesday confirmed it’s deep in negotiations to merge the bulk of its Foods division with McCormick, eyeing a potential combination valued north of $60 billion. The London-based group noted that discussions are ongoing, with a deal possibly materializing later on Tuesday, but warned the talks might yet collapse.
That stands out as the strongest indication so far that chief executive Fernando Fernandez intends to move forward with his most significant portfolio shift since stepping in back in March 2025. If a deal goes through, Unilever would be pulling further away from its slower-growing packaged food segment and doubling down on beauty, personal care, and home products—precisely the categories it’s been targeting for faster growth.
This came just a day after Reuters revealed Unilever had slapped a worldwide hiring freeze on the company for at least three months, blaming the escalating Middle East conflict and the potential pressure on its operations. The disclosure forces investors to weigh a large-scale restructuring as the business faces a trickier environment.
Unilever’s plan calls for a Reverse Morris Trust structure: they’d spin off the business, then merge it with another company, aiming to keep the move free of U.S. federal income tax. The company expects a cash payout of about $15.7 billion, keeping its India food assets out of the deal. After the dust settles, Unilever and its shareholders would hold a 65% stake in the new combined entity.
Foods isn’t exactly an underperformer. It pulled in 12.9 billion euros in sales last year—over a quarter of group revenue—and clocked a 22.6% operating margin, outpacing Unilever’s overall figure. Still, growth came in at just 2.5%, lagging behind other divisions and falling short of the 4%-6% sales target set by the group.
There’s sense in cutting Foods loose after years of sluggish volume, said Harsharan Mann, portfolio manager at Unilever shareholder Aviva Investors, who called the setup sensible. Mann referenced Procter & Gamble, which has taken a similar tack to shed non-core businesses while managing tax costs.
Some analysts saw merit in the industrial logic, despite the awkward mechanics. TD Cowen’s Robert Moskow called the deal’s “strategic logic” strong. GlobalData’s Neil Saunders pointed to McCormick’s operational chops, saying the company could handle Unilever’s food brands. Reuters
McCormick posted first-quarter numbers on Tuesday: net sales climbed 16.7%, organic sales ticked up 1.2%, and the company stuck to its full-year forecast. The release hit just as Reuters reported McCormick was closing in on a much bigger deal with Unilever.
The catch is execution. JPMorgan analysts flagged a need for clarity on synergies and stranded costs—the lingering overhead after a spin-off. Davis Householder, an M&A consultant, pointed out that untangling supply chains, distribution, and brand support will prove trickier, with real risk of value slipping through the cracks.
If negotiations fall apart, pressure lingers. Earlier this month, Reuters said investors were worried that another big split might pull management’s focus right after the ice cream business spun off. The March discussions with Kraft Heinz about another food deal? Those wrapped up without any agreement.
Unilever, for now, is signaling that a deal could be just around the corner. If the company inks an agreement, McCormick would pick up well-known brands like Hellmann’s and Knorr—reshaping Unilever once more. But if talks fall apart, the question of whether to sell, spin off, or simply hang on to the food unit is bound to resurface.
