Unilever shares plummet following McCormick megamerger announcement

Unilever McCormick merger – summary?

• Unilever plans $44.8bn merger of foods business with McCormick
• Markets reacted negatively with share price falls and lingering investor scepticism
• Deal structure favours Unilever but creates long timeline closing 2027
• McCormick gains scale brands Hellmann’s Knorr margins already strong
• Approval depends on shareholder sentiment and antitrust reviews UK EU US

It’s just two weeks since Unilever confirmed it’s to merge its Foods business with American spice and sauce brand McCormick & Company, Inc, in a deal worth $44.8bn (€38bn).

But, while the announcement was positioned as a great opportunity for both companies, with CEO’s Fernando Fernandez (Unilever) and Brendan Foley (McCormick) expressing their confidence in the partnership, the news was less popular with financial markets. In fact, Unilever shares nosedived on the day of the announcement, and have failed to recover since.

What’s more, Unilever’s share price was already in decline and had been since rumours of a split started to circulate early last month.

Unilever share price on London Stock Exchange

“Unilever’s share price has fallen about 14% since 17 March, around news of the Foods spinoff, suggesting investors find the timing and structure of the McCormick deal hard to digest,” says Diana Gomes, senior equity research analyst for Bloomberg Intelligence.

However, she argues the reaction overlooks the benefits of the deal – primarily that the cash-and-stock terms favour Unilever, keep leverage contained, and give it more flexibility amid macroeconomic risks.

Added to this, Gomes explains, the deal is not the “clean, fast separation” many shareholders will have wanted. Especially as they don’t get a vote.

This slow split will leave Unilever facing a “share overhang” until the deal closes in 2027, with investors deciding whether to retain their shares or sell them ahead of the demerger. And, if as many shareholders are as unhappy as it seems, we could be about to see a major sell-off.

Will Unilever Foods split pay off?

“Unilever’s separation of its slower-growth Foods business will complete its shift to a pure-play home and personal care company, with a faster growth profile led by premium brands, especially in less price-sensitive wellbeing categories,” says Gomes.

The numbers, she says, suggest the split could actually help Unilever perform better. The business delivered average volume growth of around 2.5% between 2023 and 2025, comfortably ahead of Unilever’s roughly 1.9% growth when Foods is included, and stronger than many of its home and personal care rivals. That performance is calculated on a slimmed‑down basis, stripping out the Foods brands that will sit inside the merger perimeter, the ice cream unit that was spun off in late 2025, and other non‑core food assets being sold.

Unilever will still hang on to its food operations in India, however, where favourable economic trends should support steady growth over the medium to long term.

Will merger be good for McCormick?

There’s been a huge amount of discussion surrounding Unilever’s decision to spin-off its Foods division, but significantly less discussion surrounding McCormick’s decision to merge with it. But the move will have an enormous impact on the $14.51bn American multinational, and like Unilever, its share price has taken a sizeable hit since news of a possible deal emerged – reaching a seven-year low of $48.38 on 1 April.

Though again, Gomes predicts the long-term impact to the business and its shareholders to be positive.

“The combined company, with $20bn of pro forma 2025 sales, should benefit from the strength of Unilever Foods’ global brands, especially Hellmann’s and Knorr, which made up 70% of 2025 sales,” she says.

Moreover, the diversified portfolio will give McCormick room to expand further outside the US.

The deal, says Gomes, give McCormick a Foods business that has seen little volume growth in recent years, but that should benefit from sharper focus and more investment. Margins are already solid at around 21%, comfortably ahead of McCormick’s 17%. How well McCormick integrates the business and delivers cost savings will be key to improving performance and, over time, supporting a higher valuation.

Will the Unilever-McCormick merger go ahead?

The lukewarm reception to the proposed Unilever–McCormick tie‑up by financial markets and shareholders on both sides could yet prove a decisive obstacle to completion.

Investors have expressed concerns over valuation, strategic fit and execution risk, particularly given the scale and complexity of combining two global food groups with overlapping categories and differing margin profiles. That scepticism comes at a time when large‑scale food industry transactions are already under intense scrutiny, both from competition authorities and from increasingly cautious shareholders.

And there’s a clear precedent of shareholders putting a stop to business decisions they’re not happy with. Most recently in the form of Kraft Heinz, which halted its demerger, following news its biggest investor, Berkshire Hathaway, had made moves to sell its entire stock.

Moreover, the Unilever-McCormick merger still needs to clear antitrust reviews in the United Kingdom, the European Union, and the United States. In other words governing authorities in all three countries need to agree that it doesn’t breach competition laws. Given the companies’ combined positions in key categories such as condiments, seasonings and packaged foods, regulators may scrutinise market concentration at a category or regional level, raising the possibility of divestment demands that could further weigh on the deal’s attractiveness to investors.

And so, with shareholders yet to be convinced and regulators yet to rule on the deal, all eyes will be on whether Unilever and McCormick can get this megamerger across the line.

We’ll be sure to keep you updated as the story unfolds.

Unilever is yet to respond to request for comment.