Overview
Artisan Partners, an investor known for pressing management teams at large consumer firms, publicly endorsed Unilever’s plan to merge its food operations with McCormick. The asset manager said the move should enable Unilever to "more effectively manage" its portfolio of personal care and home brands, and to "more logically separate its interests in the food business and the personal care business," according to David Samra, managing director of Artisan Partners and a founding partner of the International Value Group.
Why Artisan supports the deal
Samra said the transaction is tax-efficient and delivers shareholders "an attractive sale price." He argued that the businesses remaining at Unilever will operate in "faster-growing and highly profitable categories and geographic markets," and that, on their own, those units ought to command a higher earnings multiple than when combined with the food division.
Scale and market impact
The planned merger will create a combined company with an estimated value of about $65 billion. That would make it the second-largest food-sector transaction on record after the Kraft-Heinz deal in 2015. While Unilever’s food unit is described as a high-margin operation, its sales growth has trailed the company’s personal goods and beauty segments and has been a drag on Unilever’s target to lift group sales by 4% to 6% in the near term.
Investor pressure and management changes
Investor calls for Unilever to divest food assets intensified after it emerged in 2022 that activist investor Nelson Peltz had amassed a stake in the company. Peltz, who is now a Unilever board member, has been linked in reporting to the departures of former CEOs Alan Jope and Hein Schumacher. In the subsequent reshuffle, Fernando Fernandez, previously Unilever’s finance chief and a seasoned beauty and wellbeing executive, was elevated to CEO with an explicit mandate to streamline the company’s portfolio.
Artisan’s holding and comparative stakes
Artisan holds a $1.6 billion position in Unilever, representing 1.22% of the company’s shares. That ownership level makes Artisan the company’s ninth-largest investor, according to data from LSEG’s Workspace. By comparison, Nelson Peltz owns a $1.73 billion stake, making him the seventh-largest investor in Unilever.
Market reaction and shareholder concerns
Not all shareholders embraced the terms of the agreement. Some investors expressed unease about the structure of the transaction, its protracted timetable to completion and the possibility of antitrust scrutiny. Those reservations were reflected in market moves: Unilever shares fell 7% on the day the deal was announced, erasing about $7 billion of market value. McCormick shares declined by roughly 5%.
Artisan’s record of activism
Artisan has a history of pressing for strategic change at major global corporations. The firm has advocated for alterations at Bayer and at chocolate maker Barry Callebaut, where it later became the second-largest shareholder with an approximately 10% stake. In early 2021, Artisan wrote an open letter urging change at Danone after building a stake of more than 3% in the French food group; about a month later, Danone’s then-CEO and chairman, Emmanuel Faber, was removed and the board was overhauled.
Response and next steps
Unilever did not immediately provide a response to requests for comment. The transaction between Unilever and McCormick will move through a lengthy process to closing, during which shareholders, regulators and markets will continue to assess the strategic rationale, structural mechanics and any regulatory obstacles that could arise.
Summary of key facts
- The proposed Unilever-McCormick merger would create a company valued at about $65 billion.
- Artisan Partners, which owns $1.6 billion or 1.22% of Unilever, publicly backed the deal, calling it tax-efficient and offering an "attractive sale price."
- Unilever shares fell 7% and McCormick shares slid approximately 5% on the announcement; Unilever lost about $7 billion in market value.