Unilever soars on confirmation of McCormick Foods talks
€30bn potential sale of Knorr and Hellmann's maker would accelerate shift to beauty and personal care focus
Unilever shares surged in European trading on Thursday after the consumer goods conglomerate confirmed it is in discussions with McCormick & Company over the potential sale of its Foods division, a move that would mark one of the most significant corporate breakups in the sector's recent history.
The London-based company, whose portfolio includes household staples such as Knorr soups, Hellmann's mayonnaise, and Marmite spread, acknowledged it had received an inbound offer for its food business and was engaged in talks with the American spices and seasonings giant. McCormick separately confirmed the discussions, characterizing them as part of its ongoing portfolio review to maximize shareholder value.
The potential transaction, reported by The Guardian as an all-stock merger valued at approximately €30 billion ($33.4 billion), would likely employ a Reverse Morris Trust structure to achieve tax efficiency. This financial mechanism would allow Unilever shareholders to receive shares in the combined food business while deferring capital gains taxes, making the deal more palatable to investors.
Unilever's Foods division generated €12.9 billion in sales during 2025, achieving a record operating margin of 22.6 percent. Despite these strong margins, analysts at Barclays have estimated the enterprise value of the business at around €30 billion, reflecting the premium multiples typically commanded by pure-play food companies.
The proposed transaction would accelerate Unilever's strategic pivot toward higher-growth beauty, wellbeing, and personal care categories. The company's Personal Care division recorded 4.7 percent underlying sales growth in 2025 with operating margins expanding 50 basis points to 22.6 percent, while Beauty & Wellbeing delivered 4.3 percent sales growth. By contrast, the Foods business achieved only 2.5 percent sales growth, constrained by the mature nature of many product categories.
"Unilever views its Foods business as highly attractive, with a strong financial profile and market-leading brands," the company said in its official statement. "However, if a deal is reached, Unilever plans to focus more on beauty, personal care, and home products."
For McCormick, the deal would dramatically expand its global footprint in savory foods, adding iconic brands like Knorr and Hellmann's to a portfolio that already includes French's mustard, Old Bay seasoning, and Cholula hot sauce. The Sparks, Maryland-based company currently commands a market capitalization of approximately $15 billion, meaning any transaction would represent a transformative merger of equals rather than a traditional acquisition.
Analysts remain divided on the strategic merits of the breakup. Warren Ackerman of Barclays noted that Unilever's Foods division generates stronger margins than the group average, raising questions about whether selling a profitable business makes financial sense. However, other analysts argue that exiting the slower-growing food business could help Unilever achieve its 4 to 6 percent organic sales growth target, which has proven challenging given the food division's 2 to 3 percent growth ceiling.
Unilever's current market capitalization stands at approximately $143 billion, with shares trading at 22 times trailing earnings and carrying a 3.4 percent dividend yield. The company has a history of divesting food-related assets, having separated its ice cream division in December 2025, sold its spreads business, and exited most of its tea operations in recent years.
The talks come as consumer goods companies face increasing pressure from activist investors to streamline operations and focus on higher-margin categories. Unilever's beauty and personal care businesses typically command premium valuation multiples compared to food products, reflecting faster growth trajectories and greater pricing power in developed markets.
Both companies emphasized that there is no certainty a transaction will be agreed upon, and discussions may still collapse. However, the confirmation of talks has already injected fresh volatility into Unilever's shares, which have traded within a 52-week range of $61.31 to $74.41 and currently sit below analysts' average target price of $75.20.
If completed, the merger would reshape the competitive landscape of the global food industry and mark the culmination of Unilever's years-long transition from a broad-based consumer goods conglomerate to a focused beauty and personal care specialist. For shareholders, the key question will be whether the value unlocked through greater strategic focus outweighs the loss of a stable, profitable business that has delivered steady cash flows for decades.