Unilever’s $44.8bn merger of its food business with McCormick faces investor scepticism and regulatory hurdles—will shareholders and antitrust authorities give it the green light?
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It’s just two weeks since Unilever confirmed it’s to merge its Foods business with American spice and sauce brand McCormick & Company, Inc, in a deal worth $44.8bn (€38bn). But, while the announcement was positioned as a great opportunity for both companies, with CEO’s Fernando Fernandez (Unilever) and Brendan Foley (McCormick) expressing their confidence in the partnership, the news was less popular with financial markets. In fact, Unilever shares nosedived on the day of the announcement, and have failed to recover since. What’s more, Unilever’s share price was already in decline and had been since rumours of a split started to circulate early last month. “Unilever’s share price has fallen about 14% since 17 March, around news of the Foods spinoff, suggesting investors find the timing and structure of the McCormick deal hard to digest,” says Diana Gomes, senior equity research analyst for Bloomberg Intelligence. However, she argues the reaction overlooks the benefits of the ...