Unilever has confirmed a US$44.8bn deal to offload its food business after much speculation, as the British consumer goods goliath pivots its focus to beauty, personal care, wellness and home care.
The merger will combine Unilever Foods, the giant’s food arm which includes brands such as Hellmann’s mayonnaise and Marmite, with American food company McCormick & Company’s brand portfolio.
Together with the spice maker’s brands – such as Cholula, Maille and Frank’s – Unilever anticipates the spin-off to generate revenues of $20bn based on fiscal year 2025 data.
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Unilever will still control 65% of the new venture, but operations will be handled by McCormick & Company.
The deal is expected to generate $600m in annual cost savings for Unilever.
It is anticipated to be completed by mid-2027, subject to McCormick shareholder approval and regulatory approvals.
The separation of Unilever Foods will position Unilever as a leading pureplay Home & Personal Care (HPC) company with €39bn of revenues, based on fiscal year 2025.
Post-completion, Unilever stated it will operate solely across beauty, wellbeing, personal care and home care.
This business shake-up is part of Unilever’s commitment to accelerate its beauty, wellness and personal care divisions, which accounted for 25% of the business’ turnover last year.
Beauty and personal care brands in its portfolio include Clear, Dermalogica, Dove, Nutrafol, Paula’s Choice, Sunsilk, TREsemmé and Vaseline.
“The transaction is another decisive step to reshape Unilever into a simpler, sharper, higher growth company, built upon synergistic capabilities across science-led innovation, demand creation and operational execution,” a Unilever company statement read.
“Unilever has delivered superior performance versus the HPC sector over the last three years, demonstrating the company’s market-making abilities and competitive strengths, which, with even sharper focus, will further strengthen the value creation model for shareholders.”
The deal is expected to be undertaken by a Reverse Morris Trust, which is intended to be tax-free for US federal income tax to Unilever and its shareholders.
The consumer goods giant completed a spin-off of its ice cream business at the end of the year, while also selling off several food companies.
This included Asian food brand Conimex, plant-based meat brand The Vegetarian Butcher and snack box line Graze.
Underperforming brands on the beauty side of the business were also offloaded, including selling Kate Somerville and closing REN Clean Skincare.
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