McCormick (MKC.US) is reportedly close to finalizing a merger agreement with the food division of Unilever (UL.US), a move that would create a new industry giant valued at approximately $60 billion. An official announcement is expected before U.S. markets open on Tuesday. McCormick, known for its seasonings and sauces, owns brands such as Cholula hot sauce and French's mustard. Unilever's food portfolio includes brands like Knorr and Hellmann's.

According to reports, Unilever's board convened a meeting on Monday afternoon to review the specific terms of the pending transaction. The deal, structured as a combination of cash and stock, may be timed to coincide with McCormick's upcoming quarterly earnings release. However, sources cautioned that the plans remain subject to change.

This strategic shift by Unilever aligns with a broader trend among consumer goods giants to streamline their global operations. If the transaction is completed, the UK-based company will focus primarily on its beauty, personal care, and home care divisions. Unilever shareholders are expected to hold approximately two-thirds of the equity in the newly formed food company.

The deal is said to include a cash component of around $16 billion to meet the requirements of all parties involved. It is structured as a Reverse Morris Trust, a move designed to maximize tax benefits.

News of the potential merger provided a boost to both companies' shares. McCormick's stock rose nearly 4% in after-hours trading on Monday, while Unilever's shares gained close to 1%. Prior to this development, both stocks had experienced declines year-to-date, with McCormick down 20% and Unilever down 8%.

This potential consolidation comes at a time when the packaged food industry faces significant headwinds and declining valuations. Investors are concerned about persistent high inflation squeezing profit margins, while the growing popularity of GLP-1 drugs is also impacting food sales.

In a research note published on Monday, Deutsche Bank analyst Steve Powers warned, "We believe that mounting industry pressures and emerging challenges, which have been building for some time, are gradually undermining the traditional assumptions supporting investment in U.S. packaged goods." He added, "While some factors may prove temporary or cyclical, such as macroeconomic and geopolitical issues, demographic inflection points and deeper shifts in supply chain dynamics are more likely to have structural, long-term effects."

Large food corporations are no strangers to mergers and acquisitions, having pursued both expansion and divestiture strategies. Over the past decade, McCormick has actively pursued a flavor-focused acquisition strategy, shifting from traditional spices toward high-growth, high-margin sauce and specialty seasoning solutions. Its most transformative deal was the $4.2 billion acquisition of Reckitt Benckiser's food division in 2017, which brought iconic brands like French's mustard and Frank's RedHot sauce into its portfolio. In late 2020, McCormick further solidified its lead in the growing hot sauce category with the $800 million acquisition of the Cholula brand.

In a separate major industry consolidation, Mars completed its acquisition of Kellanova for approximately $35.9 billion in December 2025, integrating snack brands like Pringles, Cheez-It, and Pop-Tarts with its own confectionery brands like M&M's and Snickers to create a global snack powerhouse. Campbell Soup Company (CPB.US) acquired Sovos Brands, the parent company of the premium pasta sauce brand Rao's, for about $2.7 billion in March 2024. Hormel Foods (HRL.US), known for Applegate organic meats, Spam, and its bacon products, purchased the Planters nut brand from Kraft Heinz (KHC.US) for $3.35 billion in 2021.

Concurrently, investors are subjecting large food conglomerates to increased scrutiny, criticizing bloated cost structures and sluggish responses to consumer trends. For instance, hedge fund Elliott Management has initiated activist campaigns against PepsiCo (PEP.US), which has engaged in frequent acquisitions. General Mills (GIS.US) sold its U.S. yogurt business to Lactalis for $2.1 billion in June 2025 to focus on its core cereal and Blue Buffalo pet food operations.