Unilever’s food mashup is hardly a delectable prospect for shareholders
If Unilever shareholders thought the era of management-speak twaddle ended a few chief executives ago, say hello to their new partner in the food game.Brendan Foley, the boss of US spice and condiments firm McCormick, ran through the menu as he presented his big grab for Unilever’s Hellmann’s-to-Knorr-to-Marmite food division.The logic, he explained, is all about “maximal adjacency”, “actionable growth levers” and “end-to-end flavour experiences”.From the point of view of Unilever’s investors, the guff wouldn’t matter if McCormick were paying a fat price in a cash deal.But this $44.
8bn transaction is not like that.Unilever will extract $15.7bn in cash but the bulk of the value is represented by the equity element.Unilever’s shareholders will end up owning 55% of an expanded McCormick and Unilever itself will have 10%.It is a very long way from being a clean break.
In effect, the FTSE 100 firm is merging its food business with a smaller US firm that will take on oodles of debt to step up several leagues.Fernando Fernández, Unilever’s chief executive, called it “another decisive step in sharpening our portfolio”, but it is plainly more messy than previous exits.The historic Flora spreads business and the Lipton tea operation were sold straightforwardly to private equity, and the ice-creams went in a simple spin-off last year.In this latest transaction, Unilever’s investors must decide what to do with their helping of McCormick shares when they eventually get them, noting that recent performance (down about a third in the past 12 months) is less spicy than the firm’s Cholula hot sauce.To think this complicated deal will end up creating value, you have to believe two things.
Only one is easy: that Unilever, unencumbered by a food business that it hasn’t enthused about for years, will prosper,Yes, a mini-break may focus more attention on the household goods division (Comfort, Cif, Domestos and so on) and the one that properly excites Fernández: the beauty, wellbeing and personal care division (Dove, Vaseline, fancy shampoos and so on),But the food mashup just looks awkward,Unilever is contributing the bigger portion (annual sales of $12bn compared with $8bn), the one with faster recent sales growth (2,7% compared with 2%) and the one with superior profit margins (24% compared with 17%).
On the basis of those statistics, you’d think Unilever would conclude that it would be better off just managing what it’s got.After all, the appeal of Unilever’s food business is meant to be its two well-invested winning brands, Hellmann’s and Knorr, which dominate the whole.How are they helped by a side-serving of less-than-global brands such as McCormick’s French’s yellow mustard or Old Bay seasoning? Yes, Unilever gets some cash out to fund share buy-backs, but not a sum that wowed the market.The permanent arrangement is a more sprawling combined food business under faraway management.Fernández claimed it’s a case of “unlocking trapped value through a growth-led separation” but that was before he had seen the reaction in Unilever’s share price – down 7%.
There’s no way to season that number: it’s maximally adjacent to a thumbs-down.
Two-thirds of UK hospitality businesses plan to cut jobs and one in seven will close, survey finds
Two-thirds of hospitality businesses are planning to cut jobs as a result of “suffocating” costs imposed by government, as new business rates and higher wage bills come into force.Many pubs, restaurants and hotel companies will see their costs increase significantly from 1 April after Rachel Reeves’s changes to business rates and an increase in minimum wage thresholds announced at the chancellor’s November budget.An industry-wide survey of 20,000 hospitality businesses has found that as a direct result of the cost increases, 64% of firms plan to cut jobs, 42% intend to reduce trading hours and one in seven will be forced to close.“Hospitality businesses enter April facing billions of pounds in additional costs, which will force many to make heartbreaking decisions,” said bodies including UKHospitality and the British Beer and Pub Association, in a joint statement. “Hospitality’s tax burden – the highest in the economy – is suffocating the sector
US average fuel price passes $4 a gallon for first time in four years amid Iran war
Average US fuel prices have exceeded $4 a gallon for the first time in four years, piling pressure on drivers as Donald Trump’s war on Iran continues to boost oil markets.The nationwide average climbed to almost $4.02 on Tuesday, according to AAA data, capping an extraordinary rise from $2.98 just a month ago. The fuel price last reached this high in August 2022
The Voorhees law of traffic: when overtaken slow cars seem to always catch up at a red light
It is a situation experienced by many motorists: one driver overtakes another only to find the slower car is right behind them when they reach a red light. Now a researcher has used mathematics to reveal why the situation feels inevitable.Dr Conor Boland from Dublin City University has called his work “The Voorhees law of traffic”.The name is a nod to the character Jason Voorhees from the American horror film franchise Friday the 13th.“I always thought of him because he seems to just walk everywhere … His victims are running away, they’re sprinting, but he just catches them,” Boland said
Silicon Valley city to give residents doorbells equipped with cameras
A Silicon Valley city will offer its residents free wireless doorbells equipped with cameras to help police collect video evidence.The city council of Milpitas, a suburb north of San Jose, California, recently approved $60,000 to provide these devices on a one-camera-per-household, first-come, first-served basis, as was first reported by Milpitas Beat and confirmed by the Guardian.City councilmember Evelyn Chua told the Milpitas Beat the doorbell camera initiative was intended to prevent crime. “Public safety is my top priority, and this door camera initiative is about strengthening crime prevention right where it matters most – at home,” she said.“By equipping residents with tools and partnering closely with our Milpitas police department, we’re building a stronger connection between our community and law enforcement to help deter crime and protect our neighborhoods
Sam Konstas axed from Cricket Australia’s contract list for busy 2026-27 season
Australia’s Ashes-winning players have been rewarded with contracts for a bumper 2026-27 cricket season, but there was no room on the 21-man list for Sam Konstas and Glenn Maxwell.Paceman Brendan Doggett, who made his full international debut against England in November’s opening Ashes Test in Perth, earned his first national contract, while opener Jake Wetherald, who played all five Tests last summer, retained his upgraded contract despite averaging just 22.33 during the series.Bowler Michael Neser and spinner Todd Murphy were again handed full contracts, ahead of a crammed Test schedule over the next 12 months, which starts with a two-match home series against Bangladesh in August.That is followed by ODI tours to Zimbabwe and South Africa, where Australia will also play a three-Test series, before a home white-ball series against England and a run of 10 Test matches in 14 weeks, against New Zealand, India and the 150th Anniversary Test against England at the MCG
Tiger Woods says he will step away from golf and seek treatment after DUI charge
Tiger Woods said he will step away from golf to seek treatment and focus on his health after his arrest on suspicion of driving under the influence following a rollover crash near his Florida home.“I know and understand the seriousness of the situation I find myself in today,” Woods said in a statement posted on X. “I am stepping away for a period of time to seek treatment and focus on my health. This is necessary in order for me to prioritize my well-being and work toward lasting recovery.”“I’m committed to taking the time needed to return in a healthier, stronger, and more focused place, both personally and professionally
Marmite maker Unilever agrees $44.8bn deal to combine food arm with McCormick
Centuries-old pottery firm Denby set to call in administrators
Oil price jumps to $118 a barrel after Trump comments; cost of filling up family car with diesel passes £100 – as it happened
Steel bosses warn ‘back door’ loophole in UK trade rules could lead to job cuts and closures
Food price rises unlikely before summer, says boss of Sainsbury’s
UK house prices rose sharply in March but Iran war expected to cause slowdown