Unilever has confirmed it is in discussions with McCormick about a possible sale of its food business.
On Friday, 20 March, the consumer goods major said it had received an approach from Maryland-headquartered McCormick, best known for spices and seasonings.
In its statement, Unilever said it “confirms that it has received an inbound offer for its foods business and is in discussions with McCormick & Company.
There can be no certainty that any transaction will be agreed”.
According to Bloomberg Intelligence estimates, the food division could carry an equity valuation of up to €29bn ($33bn).
If completed, the transaction would be the largest in McCormick’s history. McCormick has a market capitalisation of $14.5bn, compared with Unilever’s £101bn ($135bn).
“McCormick regularly evaluates its portfolio and strategic options in pursuit of maximising shareholder value and consistent with its fiduciary duties and in consultation with its financial and legal advisors,” McCormick’s statement read.
“The company does not intend to make any additional comments regarding this matter unless and until it is determined that additional disclosure is appropriate or necessary.”
Set up in 1889, McCormick manufactures, markets, and distributes a range of spices, seasoning mixes, and condiments.
Its portfolio includes its namesake spices, French’s mustard, and Frank’s RedHot in herbs and condiment markets.
The business up for sale includes brands such as Hellmann’s mayonnaise and Knorr stock cubes.
Citing a source familiar with the matter, Bloomberg reported that the sale process is expected to be structured as a Reverse Morris Trust, a merger format intended to be tax-free.
That source said the companies are working towards an agreement by the end of the month.
A sale would also remove Unilever from direct competition with major packaged food groups such as Kraft Heinz, Nestlé and PepsiCo.
It would reposition Unilever more squarely as a household and personal care company alongside L’Oréal SA, Beiersdorf AG and Estée Lauder Cos.
Unilever CEO Fernando Fernandez, who has been in the role for about a year, has indicated that food is no longer central to the group’s strategy, identifying beauty, personal care and wellbeing as priorities for future growth.
He has said he wants two-thirds of Unilever’s turnover in the medium term to come from brands including Dove soap, Liquid IV hydration sachets and Dermalogica skin care, up from around half currently.
Unilever has already separated its ice cream operations into Magnum Ice Cream Co., keeping close to a 20% holding, and has set out plans for a further €1bn to €1.5bn of smaller food brand disposals.
