LONDON (dpa-AFX) - Spice maker McCormick & Co. Inc. (MKC) announced Tuesday its agreement to combine with consumer goods major Unilever Plc.'s (UL, ULVR.L) Foods business excluding India and other excluded businesses. In the transaction, Unilever will receive $15.7 billion in cash, and the company and its shareholders will receive shares equating to 65% of the combined company equivalent to $29.1 billion.
The transaction implies an enterprise value for Unilever Foods of approximately $44.8 billion, and an enterprise value for McCormick of around $21.0 billion.
In the pre-market activity, McCormick shares were gaining 1.5 percent, at $54.50, and Unilever shares were gaining around 0.8 percent, at $60.42.
Under the deal terms, and upon closing of the transaction, Unilever and its shareholders will receive the equity as well as cash, subject to certain closing adjustments.
Following the deal closure, Unilever shareholders are expected to own 55.1% combined-company equity, while McCormick shareholders will own 35.0% and Unilever would own 9.9% stake.
The transaction is expected to close by mid 2027, subject to McCormick shareholders' approval, receipt of required regulatory approvals and other conditions.
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 U.S. federal income tax for Unilever or its shareholders.
The combination is expected to be accretive to McCormick's net sales growth rate, operating margin and adjusted earnings per share in first full year.
The combined company is expected to benefit from expanded global reach, enhanced scale across retail and foodservice channels.
Together, the combined foodservice platform will have around $6 billion in fiscal year 2025 combined company sales.
The combined company expects to realize approximately $600 million in run-rate annual cost synergies, net of growth reinvestments.
On a combined basis, McCormick and Unilever Foods had combined company 2025 adjusted EBITDA of $4.7 billion and an operating income margin of approximately 21%.
Upon closing of the transaction, Brendan Foley would remain Chairman, President and Chief Executive Officer of McCormick, and Marcos Gabriel is expected to remain Executive Vice President and Chief Financial Officer.
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