McCormick (MKC) has struck a major deal with Unilever (UL) to combine with the latter’s Foods business, creating a global flavor giant with about $20 billion in projected annual revenue. The deal values Unilever Foods at about $44.8 billion and is expected to close by mid‑2027. Following the news, shares of McCormick and Unilever were down 5.3% and 6.5%, respectively.
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When the deal closes, Unilever and its shareholders will receive 65% of the combined company, valued at about $29.1 billion, along with a $15.7 billion cash payment. After the merger, Unilever shareholders will own 55.1% of the new company, and McCormick shareholders will own 35%. Also, Unilever itself will hold a 9.9% stake, which it plans to sell over time.
McCormick CEO Brendan Foley will lead the combined company, with executives from both organizations filling key roles.
New Global Force in Flavor
The merger combines two strong portfolios across spices, seasonings, condiments, sauces, and cooking aids. Unilever Foods’ top brands, led by Knorr and Hellmann’s, which make up about 70% of its sales, reach consumers in more than 90 countries. Also, McCormick’s brands include French’s, Frank’s RedHot, Cholula, OLD BAY, and Lawry’s.
The combined company will also have a strong food‑service presence, generating nearly $6 billion in Fiscal 2025 sales from restaurants and commercial kitchens.
Win-Win for Both Companies
Foley called the deal “transformative,” saying it speeds up the company’s long‑term strategy and strengthens its leadership in flavor. He added that the combined business will be better positioned to grow in key categories.
Unilever CEO Fernando Fernandez said the transaction helps Unilever focus on higher‑growth beauty and personal care categories while unlocking “trapped value” in its Foods division.
Synergies, Growth Targets, and Financial Outlook
The combined company expects to deliver $600 million in annual cost synergies within three years, driven by procurement, manufacturing, and SG&A efficiencies. About $100 million of those savings will be reinvested to support growth.
Together, McCormick and Unilever Foods generated $4.7 billion in adjusted EBITDA for 2025, with an operating margin of roughly 21%. With synergies, margins are expected to rise to 23-25% by year three.
The combined company plans to reduce leverage from 4.0x at closing to 3.0x within two years, aided by strong cash flow. Both companies also intend to maintain their long‑standing dividend practices.
Is MKC a Good Stock to Buy?
Turning to Wall Street, MKC stock has a Moderate Buy consensus rating based on six Buy and three Hold recommendations. The average McCormick stock price target of $68.67 implies an upside potential of 34.96%.
Is Unilever a Strong Buy?
On TipRanks, analysts have a Moderate Buy consensus rating on UL stock based on one Buy and one Hold assigned in the past three months. Further, the average Unilever price target of $69.00 per share implies 22.82% upside potential.
