Unilever has agreed to merge its food division with US spices group McCormick in a cash-and-stock transaction valuing the business at $44.8 billion, marking the British company’s exit from the food sector after nearly a century.

The news was first reported earlier this week, with Unilever confirming it was in talks with McCormick over a potential tie-up.

The deal will combine brands including Knorr and Hellmann’s with McCormick’s portfolio to create a global flavour group generating about $20 billion in annual revenue. The transaction is expected to complete by mid-2027, subject to regulatory approvals and shareholder backing.

Unilever and its shareholders will hold roughly 65 per cent of the combined company, alongside a $15.7 billion cash payment, as the group accelerates a strategic shift towards higher-growth health, beauty and personal care categories. The combined business will retain the McCormick name, with headquarters in Maryland and a planned secondary listing in Europe.

Fernando Fernández, chief executive of Unilever, said: “For Unilever, this transaction is another decisive step in sharpening our portfolio and accelerating our strategy towards high-growth categories.” He added that the deal would “unlock trapped value” through the separation of the food unit.

McCormick will gain a broader international footprint and access to a range of established global brands through the merger. Brendan Foley, chief executive of McCormick, said the agreement “accelerates McCormick’s strategy and reinforces our continued focus on flavour,” adding that the combined group would be “better positioned to accelerate growth in attractive categories”.

Reuters reported that Unilever’s food business accounted for roughly a quarter of its revenues last year but had lagged behind faster-growing divisions such as beauty and personal care. The separation follows earlier moves, including the spin-off of its ice cream brands into a standalone business.

The combined company expects to deliver around $600 million in annual cost synergies by the end of its third year. The deal forms part of a broader restructuring programme at Unilever, which has also outlined plans to cut 7,500 roles and reduce costs by €800 million over three years.

Market reaction to the announcement was muted, with shares in both companies falling in early trading. Reuters reported that McCormick stock dropped about 4 per cent, while Unilever declined more than 2 per cent.

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