Unilever-McCormick $44.8 Billion Deal Faces UK Antitrust Scrutiny

The UK’s Competition and Markets Authority (CMA) said Wednesday that its preliminary assessment identified potential competition problems in the supply of dry cooking mixes and sauces to British retailers. The companies have until Nov. 18 to propose measures addressing those concerns or face a second-phase investigation, according to Bloomberg News.

The regulatory challenge adds uncertainty to one of the food industry’s largest transactions, which would bring Unilever’s established grocery brands together with McCormick’s international portfolio of seasonings, condiments and sauces.

The proposed combination would unite businesses with significant positions in the British market, including Unilever’s Knorr and Colman’s products and McCormick’s Schwartz brand. The CMA’s concerns focus on whether the merged company would face sufficient competitive pressure from other suppliers of dry meal preparations and sauce mixes.

According to Reuters, the regulator concluded that competing products from Nestlé’s Maggi, Premier Foods’ Bisto and supermarket-owned brands might not provide adequate alternatives to constrain the combined company’s market position.

Companies Seek to Avoid Extended Investigation

Unilever and McCormick have indicated that they intend to cooperate with British authorities to resolve the issues without disrupting their planned transaction.

Bloomberg reported that both companies characterized the regulatory development as anticipated and maintained confidence that the acquisition could be completed within the expected timeframe.

Unilever has already begun efforts to divest its Colman’s brand and related assets, a move announced in August as part of preparations to address potential competition objections.

The company said discussions with prospective buyers were advancing, according to Bloomberg.

Read more: McCormick’s $44.8 Billion Unilever Food Deal Clears Key US Antitrust Hurdle

The CMA’s findings also distinguish between competition in dry food products and mustard. Reuters reported that the authority did not identify comparable concerns in mustard because American, English and French-style varieties serve different consumer preferences and are not regarded as close substitutes.

That distinction could influence the companies’ approach to developing remedies acceptable to the regulator.

Transaction Central to Unilever’s Restructuring

The proposed deal represents a significant step in Unilever Chief Executive Officer Fernando Fernandez’s strategy to simplify the company’s operations and concentrate resources on higher-growth consumer businesses.

Under the agreement, McCormick would pay $15.7 billion in cash, while Unilever and its shareholders would receive a combined 65% ownership interest in the enlarged food company.

Unilever shareholders would directly hold 55.1% of the combined business, and Unilever would retain a 9.9% stake, Bloomberg reported.

The transaction assigns a value of approximately $44.8 billion to Unilever’s food operations and would create a major international packaged-food company combining brands such as Hellmann’s mayonnaise, Knorr, French’s mustard and McCormick’s spice products.

For Unilever, the separation would accelerate its shift toward beauty, personal care, wellbeing and household products, which management considers better positioned for long-term expansion.