Unilever Nigeria Plc has confirmed that its parent company, Unilever Plc, plans to merge its global foods business with McCormick & Company, Inc., in a transaction valued at $44.8 billion. The company said it is currently assessing the implications of the merger for its local operations.
In a statement submitted to the Nigerian Exchange (NGX) on Wednesday, Peter Dada, Unilever Nigeria’s company secretary, explained that the merger is subject to regulatory approvals and other customary closing conditions.
“This global transaction is expected to create a new combined group specializing in flavours and food products,” the statement read. “At this stage, the Company is evaluating the specific implications of this global transaction on its local operations and corporate structure.”
Unilever Nigeria added that additional information on the transition, operational changes, and timelines will be shared with shareholders and the Nigerian Exchange once communicated by the parent company.
Strategic Significance of the Deal
The merger is expected to have a substantial impact on the earnings of both Unilever Plc and its Nigerian subsidiary, as the foods segment represents a major contributor to revenue. While Unilever Plc operates four business groups—beauty & wellbeing, personal care, home care, and foods—Unilever Nigeria does not have a home care business, according to its 2025 revenue breakdown.
For Unilever Plc, last year’s revenue was led by the personal care segment (€13.2 billion), followed closely by foods (€12.9 billion), beauty & wellbeing (€12.8 billion), and home care (€11.6 billion). In contrast, Unilever Nigeria’s largest revenue contributor is foods (N127.85 billion), followed by personal care (N60.08 billion) and beauty & wellbeing (N26.35 billion).
Financial Structure of the Merger
The $44.8 billion transaction will include both shares and cash. According to Unilever Plc:
- Unilever and its shareholders will receive a proportionate mix of McCormick’s existing voting and non-voting common stock, representing 65% of the fully diluted combined company equity, valued at $29.1 billion based on the last one-month volume-weighted average McCormick share price of $57.84.
- Unilever will also receive $15.7 billion in cash, subject to closing adjustments, which will be used to offset separation and tax costs, pay down debt to around 2.0x net debt to EBITDA, and support €6 billion in share buybacks scheduled between 2026 and 2029.
Breaking down shareholder equity:
- Unilever shareholders will own 55.1% of the fully diluted combined company equity.
- Unilever Plc itself will retain a 9.9% stake, demonstrating confidence in the merger’s strategic merits and integration plan. Over time, Unilever intends to gradually sell down this stake, but not earlier than one year after closing.
- McCormick shareholders will hold 35% of the combined company equity.
The transaction will be structured as a tax-efficient Reverse Morris Trust, designed to be tax-free for U.S. federal income tax purposes for Unilever and its shareholders, mitigating overall transaction-related tax costs.
Unilever Plc announced that the deal is expected to be completed by mid-2027, pending shareholder approval at McCormick, receipt of required regulatory approvals, and satisfaction of other customary conditions.
Implications for Nigeria
Unilever Nigeria is reviewing the potential effects of this global merger on its operations and corporate structure. Given that the Nigerian subsidiary’s largest revenue source is the foods business, any operational or strategic shifts by the parent company could have significant implications for local employment, supply chains, and earnings.
As the deal progresses, Unilever Nigeria has pledged to update shareholders and the NGX on any operational changes, ensuring transparency during this period of strategic transition.