4/3/2026
How Nelson Peltz Chalked Up Another Corporate Break-up at Unilever
Financial Times (04/03/26) Speed, Madeleine; Levingston, Ivan
Unilever’s (NYSE: UL, LON: ULVR) decision to combine its food business with U.S. sauce and spice maker McCormick (NYSE: MKC) in a $66 billion deal has gone down badly with plenty of shareholders. But one of them got just what he wanted. Nelson Peltz, who joined Unilever’s board in 2022, has spent years agitating for a break-up of the soap-to-sauces conglomerate. With Peltz’s backing, Unilever chair Ian Meakins pushed the Hellmann’s mayonnaise maker towards a sale of its century-old food business, according to two people familiar with the boardroom dynamics. Trian, Peltz’s investment fund, has been “unbelievably pushy on this, without a doubt," said one of the people. Despite a sale being widely expected — Unilever had already confirmed it was in advanced talks with McCormick — its announcement on Tuesday sparked a 7% drop in the FTSE 100 company’s shares when investors saw the terms. Unilever shareholders will own about 55% of the new company — which will have net debt of about four times its ebitda — with McCormick owning a 35% stake. The consumer goods group plans to begin selling down its 9.9% stake a year after the deal has completed, creating the risk of an overhang on the shares. “The feedback [from Unilever investors] is that it’s not very attractive,” said Jefferies analyst David Hayes. “They say: ‘Why would I want this food company? We are stuck with a food business now and we can’t even vote on it.’” The McCormick deal was “a unanimous decision by the board, which firmly believes it is in the best interests of Unilever’s shareholders. It will enhance the group’s structural growth profile, simplify the portfolio and unlock long-term value,” Unilever said. Unilever, formed in 1930 by the merger of Dutch margarine maker Unie with British soap business Lever Brothers, has become the latest in a series of consumer conglomerates that Peltz has helped prise apart. The activist, whose investment fund Trian owns about 1% of Unilever shares, spurred burger chain Wendy’s (NASDAQ: WEN) to sell coffee chain Tim Hortons in 2006. The following year he lobbied Cadbury to sell off its drinks business and in 2011 successfully pushed Kraft, which had acquired Cadbury, to spin off its international snacks business. Trian declined to comment. Another top Unilever shareholder said they had been calling for a carve-out of its food business for years but had been told repeatedly that a separation would be too costly and complex. Management stressed that mega brands Hellmann’s and Knorr were powerful cash generators. But shareholders, most notably Peltz, intensified the pressure. And in Meakins, a steely boardroom veteran who was appointed chair in 2023, Unilever’s strategic direction was placed in the hands of somebody willing to make the bold decisions Peltz desired. Meakins appointed current chief executive Fernando Fernández, a former president in Unilever’s beauty business and a willing collaborator in the mission to sell off its food business. A person close to Unilever’s board said a separation of its food business had “been in the making for many years." Calls for Unilever to sell the division began after it rejected a $143 billion hostile bid from Kraft Heinz (NASDAQ: KHC) in 2017. Paul Polman, Unilever’s boss at the time, appeased shareholders by selling its spreads business to private equity firm KKR for £6 billion. Successive Unilever CEOs have sliced off chunks of the food and drink portfolio since: Alan Jope, who ran the group between 2019 and 2023, sold Unilever’s tea business to CVC for €4.5 billion. During the tenure of his successor, Hein Schumacher, Unilever announced the spin-off of its ice cream division. Schumacher’s dismissal in February last year was made in part because of his resistance to a full separation of the food division, according to two people familiar with the matter. The people added that the Dutchman was wary of pushing so much change through the organization in a short period of time. “After ice cream [the board] wanted a complete break-up of the company very quickly,” one of the people said. But the paucity of potential buyers complicated their efforts. Unilever recently held talks with Kraft Heinz over a potential deal, but people familiar with the discussions said the U.S. company’s weakened state would have made a combination unpalatable for Unilever shareholders. “The only real option for separating foods in a strategic partnership was McCormick,” said the person close to Unilever’s board, adding that the cash-and-stock deal could not have been done earlier because of the relative valuations of the companies. Before this week’s declines, McCormick shares had dropped by about 40% over the past three years, whereas Unilever’s had risen by about 20%. “For the first time in years it was possible to strike a deal with a very attractive valuation,” the person said. Another person close to the deal said Peltz was not the main driving force behind the transaction, although his broad desire for a split was clear. McCormick’s leaders had long eyed a merger with Unilever’s food business and it was the U.S. company’s “dream deal,” said one person familiar with the matter. After McCormick made its approach a few months ago, the deal came together at a “sprint,” according to a person close to the talks. The deal unveiled this week will unite Unilever brands like Hellmann’s, Marmite and Maille mustard with McCormick’s red-topped spice brands and Cholula hot sauce in a single portfolio bringing in $20 billion of annual revenue. Its New York listing means a chunk of Unilever’s UK shareholders could be forced to sell their shares because of restrictions over their investment mandates. The $15.7 billion in cash that Unilever will receive from McCormick will be used to offset tax and separation costs, as well as to fund a €6 billion share buyback over the next three years. While McCormick said that the cash flow of the enlarged food business would help reduce net debt to three times earnings before interest, tax, depreciation and amortization within two years, Barclays (NYSE: BCS) analyst Warren Ackerman said some investors remained wary over its finances. He added that there was a risk that a decline in McCormick’s shares — which have fallen by about 9% since the deal’s announcement — will erode the new company’s value. A recent watering-down of UK listing rules means Unilever can push through the disposal without holding a shareholder vote. Once the deal completes, Unilever will become a faster-growing beauty and personal care specialist with more cash to buy up brands in those higher-margin categories. Analysts have long speculated that selling its food business would pave the way for a large acquisition in home and personal care. Proposed targets include Reckitt (LON: RKT) or Haleon (NYSE: HLN), the consumer healthcare business that Unilever tried to buy in 2022. Fernández moved to temper those expectations during a call with shareholders on Tuesday, saying that he intended to stick with previously announced plans to make about £1.5billion of bolt-on acquisitions a year. Hayes at Jefferies (NYSE: JEF) said his comments failed to clarify how a slimmed-down Unilever would create value for shareholders. While some investors may be unhappy about the terms of the break-up, others are relieved the issue has finally been put to bed. David Samra, portfolio manager at Artisan Partners, a top-10 Unilever investor, hailed the deal as the “conclusion of a decades-long process” to normalize Unilever’s structure. “Unilever is like the British empire,” said another major investor. “It’s so big, so complex ... it had to break up.”
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