Britain’s competition regulator said Wednesday, Nov. 11, that McCormick’s proposed combination with Unilever’s food business could weaken competition in two grocery categories: dry ingredient mixes and dry sauces sold to UK retailers. The companies have until Nov. 18 to offer a fix or face an in-depth investigation, according to the initial decision from the Competition and Markets Authority.
The finding leaves open a route to approval. It also narrows the immediate dispute: the regulator flagged products such as chili recipe mixes and parsley sauce packets, but found no comparable concern in mustard. The March deal was designed to create a combined company with an enterprise value of about $65 billion, Reuters reported.
Dry mixes and sauces face the closest scrutiny
McCormick sells dry mixes and sauces under the Schwartz brand in Britain. Unilever sells foods under brands including Knorr, Colman’s and Maille. The regulator’s decision summary says the companies are close rivals in dry ingredient mixes and in dry sauces and that putting them together would create the largest supplier by a wide margin in each category.
Competition comes from other brands and from supermarkets’ own labels, but the regulator concluded those alternatives offer limited restraint. FoodNavigator reported that the review identified Maggi as a rival in dry ingredient mixes and Bisto in dry sauces. The agency also found that limited shelf space and the strength of established suppliers make it difficult for a new brand to enter or for an existing rival to grow enough to replace the competition that would be lost.
The review examined supply to UK retailers, including supermarkets. It drew on company documents and evidence from buyers and competitors. For a supermarket, the question is whether it can turn to another supplier on comparable terms if the combined business changes its prices or range. The finding identifies a risk to that choice; it does not establish that a particular packet will become more expensive.
Why mustard came out differently
The regulator treated American, English and French mustard as distinct products. McCormick’s French’s brand supplies American-style mustard; Unilever’s Colman’s sells English mustard and Maille sells French mustard. Evidence from large retailers suggested shoppers generally did not see those styles as substitutes and supermarkets had reason to stock each. The regulator therefore found no material overlap in mustard, even though the brands can sit near one another on a shelf.
Unilever told Reuters it had already decided to sell Colman’s and was making progress in discussions with potential buyers. Colman’s also sells products beyond mustard, including recipe mixes. The regulator’s finding does not say that a Colman’s sale, by itself, would answer the dry mix and sauce concerns. Both companies told Reuters they were working with the authority.
What the companies agreed to combine
Under the March deal announcement, McCormick would combine with substantially all of Unilever Foods, bringing brands including Hellmann’s and Knorr alongside McCormick’s spices, French’s mustard and Frank’s RedHot. The combined company would retain the McCormick name, its global headquarters in Hunt Valley, Maryland, and its New York Stock Exchange listing. The companies also plan an international headquarters in the Netherlands.
The deal values Unilever Foods at about $44.8 billion and McCormick at about $21 billion, according to an investor presentation filed publicly with the U.S. Securities and Exchange Commission. Those enterprise values explain the widely reported figure for the combined business. Unilever would receive $15.7 billion in cash at closing, subject to adjustments, and Unilever and its shareholders together would receive 65 percent of the combined company’s equity. Existing McCormick shareholders would own the remaining 35 percent.
The companies projected roughly $600 million in recurring annual cost savings, net of reinvestment in growth, by the end of the third year after closing. That estimate depends on completing and integrating the businesses. McCormick’s quarterly filing says the company arranged bridge financing for the cash payment and later replaced $2 billion of the bridge commitments with a term loan facility that would be available at closing.
The next deadline is for a proposal
The companies have one week to offer commitments that address the UK findings. The authority can accept a sufficient proposal at this stage; if no acceptable proposal is offered, it says it will refer the deal for a second phase. An in-depth review could still result in clearance, clearance with conditions or a prohibition. Wednesday’s decision leaves each of those possibilities open.
The U.S. Federal Trade Commission’s public notice records early termination of the U.S. premerger waiting period on Oct. 5. That step does not settle the UK review or meet other closing conditions. In its latest quarterly update, Unilever said it expected completion by mid-2027 at the latest, subject to required regulatory approvals, a vote by McCormick shareholders and other conditions. The next development to watch is whether the companies offer a remedy that preserves competition for the two kinds of products the UK regulator identified.
