Unilever Plans Tax-Free Spinoff Valued Up to $35B
Unilever is advancing talks to spin off and merge its food division with U.S. spice maker McCormick in a deal that would give its shareholders a majority stake in the combined entity. According to sources familiar with the matter, the transaction is being structured as a reverse Morris trust (RMT) to avoid triggering capital gains taxes. This tax-efficient arrangement would result in Unilever shareholders owning more than 50% of the new, larger company.
Barclays estimates the value of Unilever's food unit, which includes brands like Hellmann's mayonnaise and Knorr stock cubes, at between €28 billion ($32 billion) and €31 billion ($35 billion), including debt. McCormick, maker of Cholula hot sauce, has an enterprise value of nearly $18 billion. This structure, where a smaller entity acquires a larger division, is a common feature of RMT deals designed for tax optimization.
Deal Forges Flavor Giant from McCormick's M&A Discipline
For Unilever, the proposed transaction marks a significant strategic pivot away from food and toward its higher-margin beauty, wellbeing, and homecare businesses. The move follows a series of recent divestments, including its ice cream division and snack brand Graze, as the company streamlines its portfolio to focus on core growth areas. By spinning off its food division, Unilever accelerates its transformation into a more focused consumer goods giant.
McCormick has reportedly tracked Unilever's food business for years, viewing its global brands as under-appreciated assets within the larger conglomerate. The spice maker’s disciplined approach to acquisitions, including its successful 2017 purchase of Reckitt Benckiser's food division, has provided it the financial flexibility to pursue this transformative merger. The combined company would become a dominant force in the global flavor and dressings market, creating significant competitive pressure across the packaged foods industry.
