Unilever Nigeria faces foods segment exit as parent firm plans $45bn global merger

UNILEVER Nigeria Plc has disclosed that its parent company, Unilever Plc, is moving to combine its global foods division with McCormick & Company, Inc., a deal worth nearly $45 billion and capable of reshaping the Nigerian subsidiary’s core business.

In a notification filed with the Nigerian Exchange Limited (NGX) on Wednesday, the company said it is currently reviewing how the proposed global transaction could affect its local structure and operations.

The statement, signed by company secretary Peter Dada, noted that the agreement between Unilever Plc and McCormick remains subject to regulatory clearances and other standard closing conditions.

According to Unilever Nigeria, the deal is expected to result in a newly formed entity focused primarily on flavours and food products, marking a strategic shift in the parent company’s portfolio.

The parent firm had earlier announced on March 31, 2026, that it entered into an agreement to merge its global foods business with McCormick, pending approvals and fulfilment of customary requirements.

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While the broader objective is to create a specialised global player in the food and flavour segment, Unilever Nigeria said it is still assessing what the changes mean for its domestic operations and corporate setup.

The company added that it will provide updates to the NGX and shareholders once more clarity emerges on timelines, transition plans, and operational adjustments.

The planned merger is expected to materially influence earnings for both Unilever Plc and its Nigerian unit, given the importance of the foods segment to their revenues.

Unilever Plc operates across four segments: beauty & wellbeing, personal care, home care, and foods. However, its Nigerian subsidiary does not run a home care business.

Globally, Unilever Plc’s largest revenue stream in 2025 came from personal care at €13.2 billion, followed closely by foods at €12.9 billion, beauty & wellbeing at €12.8 billion, and home care at €11.6 billion.

In contrast, the foods segment is the biggest revenue driver for Unilever Nigeria, generating N127.85 billion in 2025. This is significantly higher than personal care at N60.08 billion and beauty & wellbeing at N26.35 billion.

Deal structure and valuation

Unilever Plc put the total value of the transaction at $44.8 billion, combining both equity and cash components.

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Under the terms, Unilever and its shareholders will receive a mix of McCormick’s voting and non-voting shares, representing 65 percent of the combined entity, valued at about $29.1 billion based on recent share pricing.

In addition, Unilever will receive $15.7 billion in cash, which will be used to offset separation and tax-related costs, reduce debt levels to around 2.0x net debt to EBITDA, and fund a €6 billion share buyback programme scheduled between 2026 and 2029.

The deal implies an enterprise valuation of $44.8 billion for Unilever’s foods business. Further details show that Unilever plans to gradually divest its equity stake in the merged company after the transaction closes, though not earlier than one year post-completion.

Post-merger ownership will see Unilever shareholders holding 55.1 percent of the combined company, while Unilever itself retains a 9.9 percent stake. McCormick shareholders will own the remaining 35 percent.

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The company said the structure of the transaction will follow a ‘Reverse Morris Trust,’ designed to be tax-efficient and largely tax-free for U.S. federal income tax purposes.

Unilever Plc expects the transaction to be finalised by mid-2027, subject to shareholder approval from McCormick, regulatory clearances, and other standard conditions.