McCormick is merging with Unilever’s food business

By Jordan Valinsky, CNN

New York (CNN) — Hellmann’s owner Unilever is spinning off its food business and merging it with spice maker McCormick to create a grocery staples behemoth.

The deal values the Uniliver brands at about $45 billion and McCormick at $21 billion.

The merger comes at a difficult time for food companies. Customers are fickle, and Kraft Heinz has struggled to persuade customers to buy packaged food that customers no longer view as healthy. Pepsi was forced to lower prices as consumers struggle with inflation. And Kellogg split up its company to get out of the snacking business.

Unilever believes its food business is better off merging with a rival. The companies said that the combination has complementary global footprints and will “benefit from expanded global reach, enhanced scale across retail and foodservice channels and greater resources to invest in innovation, brand-building and global distribution.” They also expect to save about $300 million a year in costs from combining forces.

The two companies announced the deal Tuesday, with Unilever shareholders owning 55% of the company and McCormick shareholders owning 35%. Unilever will retain a stake in the remaining part and recieve a $15.7 billion payment.

The deal is expected to close in mid-2027 depending on regulatory approvals with McCormick CEO Brendan Foley remaining as its leader.

McCormick, recognizable for its red-capped spices by shoppers, also owns Frank’s Hot Sauce, Old Bay and Zatarain’s boxed rice.

On a call with analysts, executives said the company is primed to target Gen Z shoppers that crave flavor and will invest in brands like Cholula and mustard maker Maille. The combined company, which will remain based in Maryland, is expected to generate $20 billion in sales.

For Unilever, the deal marks another milestone under Unilever CEO Fernando Fernandez. Last year, he split off its ice cream business, which encompasses Ben & Jerry’s and Magnum, and the British company would soon only center around its beauty, home and personal care products like Dove soaps and Axe deodorant.

Unilever’s food unit, which includes Knorr stock cubes, Hellmann’s mayonnaise and Sir Kensington’s sauces, has weighed its bottom line in recent years as shoppers shift away from packaged foods to fresher alternatives. The company has been under pressure from billionaire activist investor Nelson Peltz to streamline the business.

The deal further improves McCormick’s “position as a dominant condiments player” and is a “clear portfolio optimization move” for Unilever that lets it focus on the wellness sector, said Alex Torgerson, merger and acquisition partner at West Monroe.

Meanwhile, McCormick reported earnings Tuesday with sales rising nearly 2% and reaffirmed its 2026 outlook. Shares fell nearly 6% in midday trading.

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