Marmite maker Unilever creates food empire in $45bn merger
Unilever has sealed a $45bn merger of its food brands with US spice and seasoning giant McCormick, forging a $60bn food empire in which the London-based firm holds a majority stake.
Unilever and its shareholders will own 65 per cent in the new body, with the firm receiving $15.7bn (£11.6bn) in cash and the equivalent of $29.1bn (£21.9bn) McCormick shares.
The merger marks the culmination of a telegraphed push from Unilever to shift away from its food brands, as new chief executive Fernando Fernandez bbids to make his consumer juggernaut “sharper and faster” company.
Before the merger was confirmed, analysts had speculated that a straightforward sale would be unlikely because the financial profile of Unilever’s food arm dwarfs that of McCormick.
London-based Unilever had been nearing a deal with McCormick since it confirmed talks earlier this month, in which it said its food brands comprise a “highly attractive” business with a “strong financial profile”.
Activist investor pushes for streamlining agenda
The London-listed food brands include mayonnaise maker Hellman’s, Marmite and Bovril.
Fernandez said: “For Unilever, this transaction is another decisive step in sharpening our portfolio and accelerating our strategy towards high-growth categories.”
The new chief executive plans to save €800m over three years and shed 7,500 jobs – including 200 managers as the new chief executive takes aim at “mediocrity” in the firm.
Activist investor Nelson Peltz has been pushing for Unilever to streamline its offering since taking a stake in 2022. Peltz, the founder of Trian Partners, has held a non-executive role on the FTSE 100 firm’s board since building out his stake four years ago.
“Having slimmed down, Unilever will want to show it is fighting fit for the future and it will get its next opportunity to do so with next month’s first-quarter update,” Russ Mold, AJ Bell investment director, said.
Brendan Foley, McCormick’s chief executive officer, said: “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 freezes hiring
Earlier on Tuesday it emerged that Unilver had placed an immediate freeze on hiring as it braced for costs from the Iran war.
The business, which had already cut back on hiring as part of a far-reaching cost-cutting agenda, told staff the ban on hiring will affect “all levels” of recruitment and was taken in response to the “significant challenges” posed by the crisis in the Middle East.
The significant transit delays in the Middle East are making shipping more expensive, and the manufacture of plastic packaging is becoming more expensive.
Fabian Garcia, the head of Unilever’s personal care business, wrote in a memo first reported by Reuters: “Macro economic and geopolitical realities, especially in the Middle East conflict […] bring some significant challenges for the coming few months.
“With this in mind, the Unilever Leadership Executive team has agreed a global recruitment freeze at all levels. This will be effective immediately and last for a minimum of three months.”
The firm said it has taken the steps due to an “uncertain” external environment and will adjust its plans “as necessary”.
