Marmite maker Unilever nears deal to combine food arm with US condiment giant

Unilever is in advanced talks to combine its food business with US-based McCormick, in a deal including $15.7bn (£11.9bn) cash that would give the Marmite-to-Hellmann’s mayonnaise owner majority control of a $60bn food empire.London-listed Unilever will control 65% of the new spin-off, which will combine brands such as Knorr and Pot Noodle with McCormick’s condiments and spices including French’s mustard, Old Bay seasoning and Cholula hot sauce.The remainder of the Anglo-Dutch consumer goods conglomerate – which last year hived off its ice-cream division, the home of Ben & Jerry’s, Magnum and Wall’s – would focus on beauty, personal care and home products.“The company is now in advanced discussions with McCormick & Company regarding a potential transaction,” Unilever said in a statement. “Work remains ongoing to finalise a transaction and it is possible that an agreement could be concluded today, although there can be no certainty that a transaction will be agreed.”The US-listed McCormick, which is valued at about $15bn (£11bn), is scheduled to report its latest quarterly results when markets open in New York later on Tuesday (14.30 BST).Unilever said that parts of its food business, such as its operation in India, would not be included in the new combined company, which will be worth roughly $60bn, including debt.The cash-and-stock deal, which was first reported by the Wall Street Journal, is being undertaken via a Reverse Morris Trust. This means it would be tax-free for US federal income tax for Unilever and its shareholders.Shares in Unilever nudged up 1% in early trading, while McCormick rose by 1.5% in pre-market trading in the US.The company, which is valued at about £100bn, has implemented a three-month global hiring freeze amid the impact of the widening conflict in the Middle East.If the deal goes through then the maker of Dove soap and Tresemmé shampoo would reposition itself to compete directly with large household and personal care companies including L’Oréal, Beiersdorf and Estée Lauder.It would also mark the end of nearly a century of selling food products in competition against big rivals, including Kraft Heinz, Nestlé and PepsiCo.Earlier this year, Fernando Fernández, the chief executive of Unilever, said the company was planning to shift away from food. “We are really shifting our portfolio into more beauty, more wellbeing, more personal care,” he told a conference in New York.In 2017, the company sold off its spreads business, which included brands such as Flora and I Can’t Believe It’s Not Butter. Most of its tea business, including Lipton, PG Tips and Tazo, was sold in 2022, before last year’s listing of the ice-cream business.Unilever has also disposed of brands including The Vegetarian Butcher and the healthy snacking brand Graze.