MD-based McCormick makes unsolicited offer to buy Unilever food business

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LONDON – Maryland-based spice maker McCormick has built a reputation as a savvy acquirer in the past decade, turning brands like Frank’s RedHot and French’s mustard into growth drivers that now account for a sizeable chunk of its $6.8 billion in annual sales, analysts say.

McCormick’s next trick would be its most ambitious yet.

The company is in talks with Unilever about a potential deal for its foods business, potentially marking a major shift for the British consumer goods company as it focuses on higher-growth beauty, household and personal care businesses.

London-listed Unilever, owner of Hellmann’s mayonnaise and Knorr stock cubes, said on Friday spice maker McCormick had made an offer concerning its foods business. Both companies said discussions were ongoing and that there was no certainty a deal would be agreed, providing no financial details.

The talks are an acceleration of Unilever CEO Fernando Fernandez’s plan to shift Unilever towards faster-growing non-food categories after spinning off its ice cream business last year.

Execution is ley

Hunt Valley-based McCormick, whose $14.5 billion market capitalisation is far smaller than Unilever’s foods business, will first have to finance the deal. The two companies gave no clues on how any deal might be structured, confirming ongoing talks but providing no financial details.

But acquiring brands to grow its own portfolio is a tried and tested strategy, and a deal to combine with Unilever’s food business, which also includes historic ​British brands such as Colman’s and Marmite, would make strategic sense, analysts say.

“(McCormick) has demonstrated an interest in expanding its emerging market exposure and extending its category perimeter. Indeed, it has often used M&A to accomplish these priorities,” said BNP Paribas analyst Max Gumport.

Chris Beckett, consumer staples analyst at Quilter Cheviot, cited French’s mustard and Frank’s RedHot Sauce as examples of McCormick’s success, adding, “they’ve done well with the brands that they’ve acquired.”

McCormick purchased Frank’s and French’s in a $4.2 billion deal for Reckitt’s North American food business in 2017.

Cholula hot sauce followed in 2020 in an $800 million acquisition from private equity firm L Catterton. The company holds leading brands in spices, seasoning, hot sauce and mustard.

The question now is whether McCormick can repeat those successes with more global brands.

“I think it’s possible, but not as easy as before,” said Natalia Glushchenko, director of revenue growth management at Vibrant Ingredients, which works with consumer packaged goods players including McCormick. “The market is tougher now: costs are more volatile, consumers are more price-sensitive, and retailers are pushing harder on margins. Execution will matter a lot more.”

Simplicity trumps scale

Shares in McCormick fell as much as 2.6% in early trade to their lowest since June 2018. Unilever’s shares were up 1% on the day, after losing more than 6% over two sessions as media speculation about the fate of the food assets spread.

“We think it is sensible that Unilever are looking at options for their food business,” said Richard Saldanha, global equity portfolio manager at Aviva, a Unilever investor. “It’s clear the company wants to focus on areas such as personal care and beauty where underlying category and volume growth are more attractive.”

Unilever’s food business made up about a quarter of its total sales in 2025, generating more than 12.9 billion euros ($14.91 billion) last year.

But the division is growing more slowly than Unilever’s overall business and faces headwinds from a move away from processed foods. Politicians, ​including U.S. Health Secretary Robert ​F. Kennedy Jr, have warned about their health risks and as many consumers are turning to GLP-1 weight-loss drugs, which mean people eat less.

More broadly, many consumer goods and retail companies are trimming portfolios and changing leadership structure in response to challenges from tariffs, tepid global consumer demand and, more recently, rising energy prices.

“The benefits of scale across (product) categories no longer outweigh the drawbacks of complexity,” Bernstein analysts said in a note.

Big bite to swallow

Analysts at Barclays estimated the enterprise value of Unilever’s food division at between 28 billion euros ($32.38 billion) and 31 billion euros.

That could represent a big mouthful for McCormick to swallow. The company has a market capitalisation of about $14.5 billion, making it much smaller than the potential value of Unilever’s food business. Unilever’s overall market cap is about $136 billion.

Tineke Frikkee, a portfolio manager at W1M, a Unilever investor, questioned the value for investors of the potential transaction.

“This potential deal seems complex, McCormick is much smaller than Unilever Food – Unilever Food generates around 3x the profit of McCormick – so unclear what value can be created as a combined entity, and what structure can be proposed that offers value to shareholders.”

Unilever has long been looking to slim down its food portfolio, identifying non-core European food brands worth $1 billion to $1.5 billion for the chop.

Provided Unilever gets a good price, selling the food division makes sense, said Jack Martin, investment director at Unilever investor Oberon Investments.

“It is a big chunk of the value of the business, so it is very important for Fernandez and his team to get this right.”

Unsolicited offer

McCormick’s offer was unsolicited, according to one person familiar with the situation.

Its last high-profile deal was in 2020 when it paid around $800 million for Cholula. In 2017, it paid $4.2 billion to purchase Reckitt’s North American food business, including brands such as Frank’s RedHot and French’s mustard.

The company has bid on other condiments and spice makers but not come out on top.

McCormick’s smaller size could complicate any deal. Some analysts and bankers said a deal could be structured as a “Reverse Morris Trust transaction”, which offers a tax‑efficient way for a company to sell a business.

“A deal would likely be structured along the lines of a Reverse Morris Trust transaction, with Unilever essentially spinning off its Food division, to then merge with McCormick and Unilever shareholders retaining the majority of the combined entity,” Bernstein analysts said in their note.

The companies’ confirmation of talks came after the Wall Street Journal first reported them late on Thursday.

The Financial Times reported earlier this week that Unilever had weighed merging its food assets with Kraft Heinz’s condiments business but the merger talks had ended.

($1 = 0.8650 euros)

Reporting by Yadarisa Shabong, Prerna Bedi, Aishwarya Venugopal, Lisa Jucca, Richa Naidu, Alexander Marrow, Neil J. Kanatt and Savyata Mishra; writing by Lisa Jucca and Alexander Marrow; editing by Nivedita Bhattacharjee, Tomasz Janowski, Jane Merriman, Alexander Marrow and Andrei Khalip.

This article has been updated.