Unilever in Talks to Sell Food Division to McCormick

Unilever, the consumer goods giant, has confirmed that it is in discussions with the US-based spice and seasoning maker McCormick regarding the potential sale of its food division. This division includes well-known brands such as Marmite, Hellmann’s mayonnaise, Knorr stock cubes, and the malt drink Horlicks.

The discussions come after Unilever received an offer for this business that could be valued at tens of billions of pounds. The FTSE 100 company is currently consulting with advisers about the possibility of separating its food division. This may involve either spinning off the entire division or retaining some notable brands while divesting others.

Unilever described its food division as a highly attractive business with a strong financial profile, emphasising that it includes market-leading brands in growing categories. Despite these discussions, the company noted that there is no certainty that a transaction will be reached with McCormick.

McCormick has stated that it regularly evaluates its portfolio and strategic options to maximise shareholder value. The firm, led by Chief Executive Fernando Fernandez, has been implementing a cost-cutting strategy to revitalise sales and stay competitive against rivals like Procter & Gamble and Nestlé. Fernandez’s background is predominantly in beauty; nevertheless, he believes the food division should demonstrate robust performance characteristics.

Unilever’s shift away from its food division aligns with its strategic focus on its personal care and beauty sectors, which bring in significant revenue. Recently, Unilever spun off its ice cream division, including renowned brands such as Ben & Jerry’s, as part of a restructuring initiative.

The potential divestment of its British heritage food brands has been discussed for months. Unilever has been gradually dismantling substantial segments of its traditional food empire. In recent years, the company has divested various brands, including The Vegetarian Butcher and the snack brand Graze, as part of its strategy to reduce approximately €1 billion worth of non-core food brands.

McCormick has established a reputation for aggressive acquisitions, with significant purchases including French’s and Frank’s RedHot. The company generates around $7 billion in annual revenue and is valued at roughly $15 billion. In contrast, Unilever reports annual sales near €50 billion, with its food division generating approximately €13.4 billion, showcasing the scale difference in this potential transaction.

A successful acquisition of an entity as large as Unilever would require McCormick to present a compelling and robust proposal, especially given its experience with previous UK assets.