Shareholder accuses Unilever over McCormick merger: overview
- Terry Smith has accused Unilever of misleading shareholders over Foods merger
- Smith said previous management assurances ruled out major disposals
- The investor linked the deal to Nelson Peltz influence
- Unilever said the merger creates two stronger focused businesses
- Combined Foods business and McCormick would generate $20bn revenues
Former Unilever shareholder, Terry Smith, has accused the multinational of misleading shareholders over plans to merge its Foods business with McCormick & Company, Inc..
The Fundsmith LLP founder, who recently sold his entire stake (worth hundreds of millions of pounds) in the British CPG giant made the comments in a letter to investors, published on the firm’s site.
In it, he says he had previously been told by management that there would be no significant sell-offs after the group demerged its ice creams business back in 2025.
“We asked if that was all the disposals for the foreseeable future and were told it was.“
The McCormick merger, he says, “flies in the face” of that promise.
Smith also commented that he appreciated the approach of former CEO Hein Schumacher indicating that he intended to keep Foods within the multinational. Could this shift in strategy be the reason Schumacher decided to step down after just 18 months in the role?
Smith went on to suggest the deal had “all the hallmarks” of activist investor Nelson Peltz – a major shareholder and Unilever Board member.
“We have seen Nelson in action back to the 1980s. 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.”
Smith concluded his comments by questioning McCormick’s management credentials, saying he’s “not convinced they are good enough for the existing business let alone a massively enlarged one”.
Unilever made the following statement in response to Smith’s letter:
“This transaction enables a growth-led separation of Foods at an attractive valuation, creating two stronger businesses, both positioned to win in their categories. It was a unanimous decision by the Board and under the UK rules, it was the Board’s responsibility to approve the transaction and conclude that it is in the best interests of the company and its shareholders. We value open dialogue with our shareholders and will continue our engagement to explain the benefits of the transaction.”
Unilever and McCormick merger
The criticism comes against the backdrop of one of the biggest food industry deals of the year.
Announced in March, the transaction will combine Unilever Foods with McCormick to create what the companies describe as a “global flavour powerhouse” with around $20bn (€17.3bn) in annual revenues.
The combined business will bring together brands including Hellmann’s Mayonnaise and McCormick’s Cholula Hot Sauce.
For Unilever, the move represents another major step in its streamlining strategy. Once the transaction is complete, the company will become a pure-play home and personal care group, focused on Beauty & Wellbeing, Personal Care and Home Care.
The deal is set to close in mid-2027.
