Unilever is in discussions to sell its food division to US-based spice and sauce maker McCormick. This is seen as a multibillion-dollar transaction marking a significant step in the company’s long-term shift towards faster-growing beauty and personal care categories. A potential sale would mark a transformative moment for Unilever, which has already divested parts of its portfolio, including spreads, tea and ice cream businesses, as part of a broader strategic realignment. Both companies are reportedly working toward finalizing an agreement before the end of the month.

Analysts estimate the standalone valuation of Unilever’s food division to be at between $36 billion and $37 billion, based on an enterprise value-to-EBITDA multiple of 9.5 times. According to sources, McCormick is likely to finance the acquisition through a mix of stock and cash.

Shares in Unilever rose around 1 per cent following the news, while McCormick’s shares dipped marginally by 0.2 per cent.  The proposed transaction comes amid pressure from key shareholders, including activist investor Nelson Peltz, who joined Unilever’s board in 2022 and has been advocating for a sale of the food business. Leadership changes have also been linked to disagreements over the division’s future. Former chief executive Hein Schumacher was removed in February last year, partly due to differences over strategy, and was succeeded by Fernando Fernández, previously head of Unilever’s beauty division.

Despite the ongoing talks, Unilever stated that its food business remains highly attractive and expressed confidence in its future within the group.

On the other hand, Maryland-based McCormick, known for its spice portfolio as well as products such as Cholula and French’s, could use the acquisition to expand its footprint in emerging markets where Unilever has a strong presence.