Britain’s Unilever (UL) is expected to announce a merger with spice maker McCormick (MKC) in a deal that will create a $60 billion U.S. food company.
Unilever and its shareholders are expected to retain a 65% stake in the combined entity. The new company will be structured as a Reverse Morris Trust (RMT), which offers tax benefits.
Unilever is also said to be considering a spin-off of its remaining food business once the merger with McCormick is completed.
Analysts value the merged Unilever and McCormick at about $60 billion U.S. The deal comes after Unilever spun off its ice cream business last year, which included the brand Ben & Jerry's.
Unilever has a sprawling consumer brands' business that includes everything from Dove soap to Hellmann's mayonnaise.
However, the company’s food unit has lagged since the Covid-19 pandemic struck in 2020 and hurt Unilever’s ambitions to increase overall sales by 4% to 6%.
In addition to its ice cream brands, Unilever has divested several other non-core food assets in recent years, including snack brand Graze and plant-based meat brand The Vegetarian Butcher.
The merger with Unilever comes with McCormick’s stock having dropped 24% so far in March, putting it on track for its biggest monthly decline since September 1980.
McCormick’s stock hit an eight-year low on March 26 and is currently trading at $53.72 U.S. a share.
UL stock has fallen 10% over the past year to trade at $59.98 U.S. per share.
