Deal in advanced talks
Unilever PLC is reported to be in advanced discussions to combine its food operations with McCormick & Company Inc., creating an aggregate business valued at about $60 billion. Sources cited in reporting say the agreement would include debt and could be publicly announced as early as Tuesday.
Board review and timing
Unilever's board convened on Monday afternoon to review the specifics of the proposed transaction. The companies are negotiating a cash-and-stock structure that has been timed to potentially align with McCormick's upcoming quarterly results. Those involved caution the timetable is not guaranteed and the plans could still be delayed.
Ownership and financing details
Under the reported terms, Unilever shareholders would hold roughly two-thirds of the combined food business once the transaction closes. The deal reportedly contains a cash element of about $16 billion intended to meet the financial needs of the parties to the agreement. The transaction is expected to be structured as a reverse Morris trust, a format identified in the reporting as a means to maximize potential tax benefits.
Strategic focus for Unilever
If completed, the move would leave the U.K.-based consumer goods group concentrated on its beauty, personal-care and home product divisions. Unilever presently has a market value above $130 billion and owns brands in the food category such as Knorr.
McCormick's profile and market reaction
McCormick, with a market capitalization just over $14 billion, is known for its red-capped spice bottles and owns brands including French's mustard, Old Bay seasoning and Cholula hot sauce. Following the reports, McCormick & Co. shares rose about 1.5% in after-hours trading, a market response consistent with investor interest in the proposed combination.
Context retained from reporting
The reporting that first detailed these negotiations cited people familiar with the matter. Beyond the items outlined above - the mix of cash and stock, the reported $16 billion cash component, the reverse Morris trust structure, and the potential announcement timing - parties involved have warned that the plans could change.