McCormick’s acquisition of Unilever’s food assets is to face the scrutiny of the UK watchdog as the regulator assesses any competition impacts.
The Competition and Markets Authority (CMA) said it is launching a so-called Phase I investigation into the deal announced in March for a value of $44.8bn.
It will see US-headquartered seasonings and spices business McCormick & Co. take over most of the FMCG giant’s food assets, including the Knorr soups and Hellmann’s mayonnaise brands but not Lipton drinks nor Unilever’s operations in India, Nepal and Portugal.
Last month, Unilever and McCormick & Co. decided to look for a buyer for the UK group’s Colman’s mustard brand. At the time, Unilever said they had made the move "to proactively seek to address potential competition concerns".
The regulator said today (16 September) it had invited comments to determine any “impact that the transaction could have on competition in the UK” on 21 July, with interested parties given to 5 August to submit responses.
It has consequently started its Phase 1 probe with a deadline to complete that investigation on 11 November, when the CMA will decide whether to follow-up with a more in-depth Phase 2 assessment.
Unilever issued a statement in August to explain its intention to put Colman’s on the market.
“A decision has been taken to market the Colman’s brand and assets to potential buyers in order to proactively seek to address potential competition concerns from the planned combination of Unilever Foods and McCormick,” the statement read.
Colman’s joins Unilever’s lifestyle nutrition business, the company’s Buavita unit, the Lipton brand and the India, Nepal and Portugal assets that are now not included in the deal
Meanwhile, the CMA gave no other details today regarding its decision to pursue a Phase 2 enquiry based on the initial feedback received.
Under the terms of the transaction, Unilever and its investors are to receive a mix of McCormick’s existing voting and non-voting common stock, equating to 65% of the combined business.
When the deal is closed, Unilever shareholders are expected to own 55.1% of the enlarged group, McCormick shareholders 35% and Unilever 9.9%. The London-listed major will also receive $15.7bn in cash, subject to certain closing adjustments.
The combined company, which will include the US firm’s brands such as Schwartz spices, French’s mustard and Cholula hot sauces, will be led by McCormick CEO Brendan Foley and CFO Marcos Gabriel, with “senior management representation” from Unilever’s food business.
