Unilever said on Tuesday it was in advanced talks to combine its food division with US spices group McCormick in a transaction that could create a business worth more than $60 billion and deliver $15.7 billion in cash to the consumer goods company.

Reuters reported that the proposed deal would see Unilever spin off its food unit and merge it with McCormick using a Reverse Morris Trust structure, allowing tax efficiencies. Unilever shareholders are expected to retain a 65 per cent stake in the combined entity, although the company cautioned that “there can be no certainty that a transaction will be agreed”.

The potential tie-up marks the most significant strategic move by chief executive Fernando Fernandez since taking the helm in March 2025. It follows the spin-off of Unilever’s ice cream business last year and reflects a broader effort to streamline the group’s portfolio and prioritise faster-growing categories.

The combined entity could exceed $60 billion in value, based on Barclays analysts’ estimates of Unilever’s food division at €28 billion to €31 billion including debt, alongside McCormick’s market capitalisation of $14.2 billion and the cash component. The deal is expected to exclude certain assets, including Unilever’s food operations in India.

Unilever stated that “work remains ongoing to agree and finalise a transaction and it is possible that an agreement could be concluded today”, while reiterating that its food business remains “highly attractive with a strong financial profile”.

Unilever has faced sustained investor pressure to divest slower-growing food brands, particularly after activist investor Nelson Peltz built a stake in 2022. The company has already sold assets including Graze and The Vegetarian Butcher as part of its restructuring efforts.

The shift comes as major food groups struggle to generate growth, with consumers trading down to cheaper private-label products and demand affected by the rising use of weight-loss drugs. By contrast, Unilever’s beauty and personal care divisions have delivered stronger growth, supporting its pivot away from packaged foods.

The food division generated €12.9 billion in sales last year, accounting for just over a quarter of Unilever’s €50.5 billion total revenue, but has lagged the group’s targeted growth rate of 4 to 6 per cent.

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