McCormick to Combine with Unilever's Foods Business to Form a Major Global Flavor-Focused Company

McCormick & Company, Incorporated (NYSE: MKC) ("McCormick") and Unilever PLC (LSE: ULVR / NYSE: UL) ("Unilever"), has announced that they have entered into an agreement to combine McCormick with Unilever's Foods business excluding India and other excluded businesses ("Unilever Foods"), creating a global flavor leader in attractive and high-growth categories with approximately USD 20 billion in combined fiscal year 2025 revenue.

Under the terms of the agreement and upon closing of the transaction, Unilever and its shareholders are expected to receive shares equating to 65.0% of the fully diluted combined-company outstanding equity, equivalent to USD 29.1 billion3 based on McCormick's one-month volume-weighted average price of USD 57.84.4 Unilever will also receive USD 15.7 billion in cash, subject to certain closing adjustments.

This implies an Enterprise Value for Unilever Foods of approximately USD 44.8 billion, or approximately 13.8x fiscal year 2025 EBITDA. In addition, this reflects an enterprise value for McCormick of approximately USD 21.0 billion, or approximately 13.8x fiscal year 2025 EBITDA.

Upon closing of the transaction, Unilever shareholders are expected to own 55.1%, McCormick shareholders will own 35.0% and Unilever is expected to own 9.9% of the fully diluted combined-company outstanding equity. The transaction is not expected to give rise to United States federal income tax for Unilever or its shareholders, thereby mitigating some of the overall tax costs associated with the transaction.

The combination brings together two industry-leading organizations with complementary global footprints and portfolios of iconic brands across herbs, spices, seasonings, cooking aids, condiments and sauces. The combined company is expected to benefit from expanded global reach, enhanced scale across retail and foodservice channels and greater resources to invest in innovation, brand-building and global distribution.

Brendan Foley, Chairman, President and Chief Executive Officer of McCormick:

"This transformative combination accelerates McCormick's strategy and reinforces our continued focus on flavor. The Unilever Foods business is one we have long admired, with a portfolio that complements our existing business, capabilities and long-term vision. Together, we will be better positioned to accelerate growth in attractive categories. This combination will create a diversified flavor leader with a robust growth profile that remains differentiated by its focus on flavoring 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 enable us to deliver flavor in new and exciting ways for more consumers, driving significant growth across the combined portfolio and value for all stakeholders. Integrating two global organizations of this scale requires disciplined execution, and we are confident that our detailed integration roadmap, experienced teams from McCormick and Unilever, external advisors and our strong partnership will enable us to capture the full value of this opportunity."

"McCormick is the right partner for Unilever Foods' brands and employees, and our shared culture and values will empower our combination. We are excited to welcome their exceptional talent and international expertise to our Power of People culture."

Fernando Fernández, Chief Executive Officer of Unilever:

"For Unilever, this transaction is another decisive step in sharpening our portfolio and accelerating our strategy towards high-growth categories as a €39 billion pureplay HPC company with a proven sector-leading growth profile. We are unlocking trapped value through a growth-led separation of Foods, creating a scaled, global flavor powerhouse. By combining Unilever Foods' iconic leading brands and global reach with McCormick's exceptional portfolio, category expertise and capabilities, we are establishing a focused, high-quality business with significant top line growth and value creation potential.

This is a combination built on strong strategic and cultural alignment, providing exciting opportunities for our people and ensuring our Foods brands continue to thrive as part of a global flavor leader. Our retained ownership stake reflects our conviction in the strength of the combined company and its future prospects."

Unilever Foods has a global portfolio of flavoring and cooking aids, condiments, sauces and other food products, led by iconic brands Knorr and Hellmann's, which comprise approximately 70% of sales. Knorr, a household name in more than 90 countries around the world, serves more than five billion consumers worldwide, and Hellmann's, one of the world's leading mayonnaise brands, reaches consumers in more than 65 countries.

Alongside these global power brands, Unilever Foods' portfolio includes a wide array of local brands across EMEA, Latin America and APAC. The business has achieved an underlying sales CAGR of approximately 2.8% over the past two years, supported by consistent volume growth.

Unilever Foods' assets are a highly complementary fit with McCormick's portfolio of iconic brands, which include McCormick, French's, Frank's RedHot, Cholula, Stubb's, OLD BAY and Lawry's, and its 137-year history of flavoring foods for every cuisine and trend. 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, Highly 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 across McCormick and Unilever Foods businesses: The combination is positioned to unlock new regions, flavors, innovation and consumption occasions in both retail and foodservice channels across the combined business. McCormick's brands will benefit from greater access to high-growth regions in EMEA, Latin America and APAC served by Unilever Foods' extensive infrastructure and distribution. Unilever Foods' brands will have an enhanced strategic runway for growth in North America, where McCormick has a stronger profile and capabilities.
• Creates a leading global foodservice platform: The combined company will benefit from a combined foodservice platform with broad global distribution capabilities and customer recognition, supported by McCormick's front-of-house strength and Unilever Foods' chef-led, back-of-house strength. Together, the combined foodservice platform will have approximately USD 6 billion in fiscal year 2025 combined company sales.
• Combines differentiated technical expertise: McCormick is committed to remaining a flavor focused business and will integrate and leverage Unilever Foods' technology capabilities, R&D centers and manufacturing footprint. The total breadth of flavor insights, advanced technology and technical expertise across R&D, marketing and supply chain will further strengthen resources to drive acceleration in innovation and product development for the combined company and its customers.
• Builds on McCormick's history of accretive M&A and brand-building: McCormick has a successful history of integrating leading flavor brands and investing in and accelerating their performance, including Lawry's, Cholula, French's and Red Hot. In these cases, the McCormick team achieved accretion to growth, synergies and earnings targets while enhancing brand equity and consumption growth for the brands.
• Unites two culturally aligned, purpose-led organizations: The combination is founded in exceptional talent, technology and capabilities from two successful organizations with complementary geographic expertise. McCormick and Unilever share a commitment to conducting business with high ethical standards and social responsibility, and these values will continue to guide operations at the combined company.

Attractive Financial Profile Positions Company for Continued Volume-Driven Growth and Value Creation

• Positioned for accelerated growth in flavor categories with structurally growing demand: Shareholders of the combined company are expected to benefit from the combination of two high-performing businesses that have consistently delivered volume growth. In 2025, Unilever Foods and McCormick together grew at approximately 2.4%, well above their peers in these categories.9 The combined company is expected to target a growth rate of 3 to 5% in year 3, supported by increased investment and volume-driven revenue opportunities. The portfolio of the combined company will be focused on categories benefiting from growing consumer trends, including increased demand for flavors both at home and away from home, and complementary to the rising demand for protein and produce.
• Supports value creation through realization of substantial synergies: The combined company expects to realize approximately USD 600 million in run-rate annual cost synergies, net of growth reinvestments. These cost synergies are projected to be captured over a three-year period, with approximately two-thirds of the synergies realized by the end of year two, driven by procurement, manufacturing and SG&A. One-time expenditures to achieve these synergies are estimated to be approximately USD 300 million. Approximately USD 100 million incremental cost and revenue synergies will be reinvested to further drive growth.
• Enables attractive and sustainable margin profile, supporting resilience and enabling reinvestment: On a combined basis, McCormick and Unilever Foods had combined company 2025 adjusted EBITDA of USD 4.7 billion and an operating income margin of approximately 21%.10 Including estimated run-rate synergies, the expected operating income margin for the combined company for the third year post-closing is expected to be approximately 23 to 25%.
• Reinforces long-term balance sheet stability and commitment to shareholder returns: The combined company is expected to deliver strong cash flow from operations, providing a clear path to reduce net leverage from an estimated 4.0x or less at closing to 3.0x within two years post-closing. Additionally, both McCormick and Unilever have long-standing commitments to shareholder returns and historically have had dividend payout ratios of approximately 60%. The combined company expects to maintain a dividend consistent with this history.
• Integration planning is a key priority: Both organizations have already started extensive planning for integrating two global organizations of this scale. The companies have already planned out a detailed integration roadmap, with experienced team members from McCormick and Unilever, and external advisors. The combined company is well positioned to execute the integration effectively and capture the full value of the combination.

Leadership, Governance, Listing and Headquarters

Upon closing of the transaction, Brendan Foley is expected to remain Chairman, President and Chief Executive Officer of McCormick, and Marcos Gabriel is expected to remain Executive Vice President and Chief Financial Officer. Executives from both companies will serve in key leadership roles.

Upon closing, Unilever will appoint four of twelve members of the combined company 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 maintain its Global Headquarters in Hunt Valley, Maryland, and have an International Headquarters in the Netherlands. Unilever Foods has a long-standing presence in the Netherlands, which is home to its world-leading R&D capability that supports its deep sector expertise.

Management views this capability as a core strength of the combined company and intends to maintain a substantial presence in the Netherlands. The combined company is planning to have a secondary stock listing in Europe to reflect the global nature of Unilever's current shareholder base.

As part of a larger, flavor-focused company, employees of both businesses will gain access to expanded career growth and professional development opportunities.

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 each class.

Unilever is expected to own 9.9% of each class of the fully diluted combined company equity and is committed to an orderly sell-down over time. Under the terms of the agreement, Unilever will also receive a one-time USD 15.7 billion cash payment, subject to certain closing adjustments.

The separation of Unilever's Foods business from the Unilever Group is expected to be structured as a Reverse Morris Trust transaction that is not expected to give rise to United States federal income tax for Unilever or its shareholders. The agreement has been unanimously approved by both the McCormick and Unilever Boards of Directors.

Upon closing of the transaction, the combined company's net leverage is expected 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 USD 15.7 billion in committed bridge financing from Citigroup Global Markets Inc., Goldman Sachs Bank USA and Morgan Stanley Senior Funding, Inc., and intends to fund the cash component of the purchase price through a combination of cash from its balance sheet and proceeds from new debt issuance.

The transaction is expected to close by mid 2027, subject to McCormick shareholders' approval, receipt of required regulatory approvals and the satisfaction of other customary closing conditions. Works council consultation will be conducted prior to the closing of the transaction.