Terry Smith, the Veteran fund manager, has accused Unilever of misleading investors over its strategy after the consumer goods group agreed to combine its food division with McCormick in a deal valuing the enlarged business at nearly $66 billion, saying management had previously indicated there would be no further major disposals following last year's ice cream spin-off.

According to the Financial Times, Smith said Unilever's management told him after the 2025 demerger of its ice cream business that there would be no more significant asset sales in the foreseeable future. Unilever announced in March that it would separate its food division and merge it with US spice maker McCormick, creating a new food company with a combined enterprise value of almost $66 billion.

In his latest investor update, Smith said: "Apart from the fact that this flies in the face of what we were told and what we liked about Hein Schumacher's approach, it has all the hallmarks of Nelson Peltz, the activist investor who is on the board." He added: "We are not fans of the idea that corporate activity solves fundamental problems. Nor are we fans of boards who listen to activists who are not long-term investors."

The Financial Times reported that some Unilever shareholders have expressed concern about the level of debt the combined food company will carry and the scale of change after two major portfolio restructurings. A person familiar with negotiations previously told the newspaper that Trian, Peltz's investment firm and a major Unilever shareholder, had been "unbelievably pushy" in advocating a sale of the food business.

Unilever defended the transaction, saying it "enables a growth-led separation" of its food business "at an attractive valuation, creating two stronger businesses, both positioned to win in their categories". The company said the deal received unanimous board approval. Smith said Fundsmith knew McCormick's management well and was "not convinced they are good enough for the existing business let alone a massively enlarged one". McCormick declined to comment.

Smith has now exited both his Unilever holding and the Magnum Ice Cream business that was spun off last year, ending a shareholding in the group that stretched back more than 15 years. The sale followed his criticism that Unilever had "abandoned its promised operational focus in favour of activist-driven break-ups".

Smith's criticism came as his £12.3 billion Fundsmith Equity fund reported a 2.9 per cent decline in the first six months of the year, compared with an 11.2 per cent gain for the MSCI World Index. Smith blamed continued investor flows into passive funds tracking technology stocks, saying: "You should therefore expect that we will be more active in future."

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