McCormick Strikes Mega Deal With Unilever To Build $20 Billion Flavor Giant

McCormick & Company Inc. (NYSE:MKC) and Unilever PLC (NYSE:UL) said Tuesday they have agreed to combine McCormick with Unilever’s Foods business, excluding India and certain other operations, forming a global flavor-focused company with about $20 billion in combined 2025 revenue. Transaction Creates $20 Billion Flavor-Focused Company The merger excludes Unilever’s food operations in India, Nepal and Portugal, as well as its Lifestyle & Nutrition segment, Buavita business and Lipton Ready-to-Drink unit. Under the agreement, Unilever and its shareholders will receive equity representing 65% of the combined company, valued at $29.1 billion based on McCormick’s one-month volume-weighted average price of $57.84. Unilever will also receive $15.7 billion in cash. The deal implies an enterprise value of about $44.8 billion for Unilever Foods and $21.0 billion for McCormick, both at roughly 13.8 times fiscal 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 structured to avoid U.S. federal income tax for Unilever and its shareholders. Strategic Fit and Growth Outlook The combination brings together complementary portfolios spanning herbs, spices, condiments and sauces, including brands such as Knorr and Hellmann’s alongside McCormick, French’s and Frank’s RedHot. The companies expect expanded global reach, stronger foodservice capabilities and increased investment in innovation and distribution. Brendan Foley, Chairman, President and Chief Executive Officer of McCormick, said, “This transformative combination accelerates McCormick’s strategy and reinforces our continued focus on flavor.” He added that the deal will “create a diversified flavor leader with a robust growth profile.” Unilever CEO Fernando Fernández said the transaction “is another decisive step in sharpening our portfolio,” adding it will create “a scaled, global flavor powerhouse.” Synergies, Margins and Financial Profile The companies expect $600 million in annual cost synergies within three years, with about two-thirds realized by year two. An additional $100 million in cost and revenue synergies will be reinvested in growth. The combined company reported pro forma 2025 adjusted EBITDA of $4.7 billion and an operating margin of about 21%. Including synergies, margins are expected to reach 23% to 25% by year three. The company targets 3% to 5% growth by year three. McCormick plans to maintain its dividend policy. Net leverage is expected to be 4.0x or less at closing, declining to 3.0x within two years. Structure, Leadership and Timeline McCormick will retain its name, NYSE listing and Hunt Valley, Maryland headquarters, with an international base in the Netherlands. Brendan Foley will remain CEO, and Unilever will appoint four directors to the 12-member board. The deal, approved by both boards, is expected to close by mid-2027, subject to shareholder and regulatory approvals. Price Action: Unilever shares were down 4.23% at $57.44 at the time of publication on Tuesday, according to Benzinga Pro data. McCormick & Co shares were down 5.16% at $50.95. Photo via Shutterstock