Unilever Nigeria Plc says its parent company, Unilever Plc, plans to merge its global food business segment to McCormick & Company, Inc.
In a statement on Wednesday, sent to the Nigerian Exchange
(NGX), the company said it is assessing the implications of the planned merger.
According to the statement signed by Peter Dada, company
secretary, the merger agreement between Unilever Plc and McCormick is subject
to regulatory approvals and other customary conditions.
Unilever Nigeria said the transaction is expected to create
a new combined group focused on flavours and food products.
“Unilever Pic (the parent company), officially announced on
March 31, 2026, that it has entered into an agreement to combine its global
foods business with McCormick & Company, Inc., subject to required
regulatory approvals and the satisfaction of other customary closing
conditions,” the statement reads.
“This global transaction is expected to create a new
combined group specialising in flavours and food products.
“At this stage, the Company is evaluating the specific
implications of this global transaction on its local operations and corporate
structure.”
Unilever Nigeria also said further details on the
transition, timeline, and any operational changes will be communicated to the
Nigerian Exchange and shareholders once received from the parent company.
The merger is expected to have a significant impact on the
earnings of both Unilever Plc and Unilever Nigeria, as the food business is a
major revenue contributor to the companies’ turnover.
Unilever Plc has four business groups, beauty &
wellbeing, personal care, home care, and foods segments, while Unilever Nigeria
does not operate home care business, according to its revenue breakdown for
2025.
For Unilever Plc, personal care business generates the
largest revenue last year, accounting for €13.2 billion, followed by foods
segment’s €12.9 billion, while beauty and well-being grossed €12.8 billion, and
home care records €11.6 billion.
However, as of 2025, the Nigerian subsidiary’s largest
revenue contributor is the foods business, which generates N127.85 billion,
followed by personal care’s N60.08 billion, and beauty & wellbeing, which
generates N26.35 billion.
BREAKDOWN OF UNILEVER, MCCORMICK’S DEAL
According to a statement by Unilever Plc, the transaction is
valued at $44.8 billion, which consists of shares and cash.
“In this Transaction, Unilever and Unilever shareholders
will receive a proportionate mix of McCormick’s existing voting and non-voting
common stock, equating to 65.0% of the fully diluted combined company equity,
equivalent to $29.1 billion[c] based on the last 1-month volume-weighted
average McCormick share price of $57.84[c],” Unilever Plc said.
“Unilever will also receive $15.7 billion in cash, subject
to certain closing adjustments, that will offset one-off separation and tax
costs; pay down debt to its current level of c.2.0x net debt to EBITDA
following closing; and support €6 billion of share buy-backs expected to run
between 2026 and 2029.
“The Transaction reflects an enterprise value of $44.8
billion for Unilever Foods.”
Breaking down the deal further, Unilever said the shares it
receives in McCormick will be sold gradually within a year after the
transaction closes.
“Unilever shareholders will own 55.1% of the fully diluted
combined company equity. Unilever will own a 9.9% stake, underscoring its
support and confidence in the strategic merits, integration plan and execution
of the combined company,” the company said.
“Over time, and not earlier than one year after closing,
Unilever intends to sell down its stake in an orderly and considered manner.
McCormick shareholders will own 35.0% of the fully diluted combined company
equity.”
The parent company said the transaction will be structured as a tax-efficient “Reverse Morris Trust” transaction and is intended to be “tax-free for U.S. federal income tax purposes to Unilever and its shareholders, thereby mitigating some of the overall transaction-related tax costs”.
Unilever Plc said the transaction is expected to be
completed by mid-2027, subject to McCormick shareholder approval, receipt of
required regulatory approvals and the satisfaction of other customary closing
conditions.
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