🧾 What This Document Is

This is a transcript of an investor call held by Unilever on March 31, 2026. It details a major proposed deal: Unilever is combining its Foods business with McCormick & Company to create a new global flavor leader. At the same time, Unilever will become a "pure-play" Home & Personal Care (HPC) company. This call is part of the regulatory filing process (Form 425) for the transaction.

🏢 The Big Deal: Two Transformations in One

In simple terms, Unilever is splitting itself into two focused companies.

• Part 1: A New Flavor Giant. Unilever's entire Foods division (think Knorr, Hellmann's) is merging with McCormick (the spice company). This creates a combined powerhouse with $20 billion in sales, focused solely on flavors and condiments.
• Part 2: A Pure-Play HPC Unilever. What's left of Unilever is a €39 billion company dedicated entirely to beauty, wellness, personal care, and home care (like Dove, Vaseline, Rexona).

👉 Why it matters: Unilever is betting that two focused companies will be worth more than one combined conglomerate. It can now chase faster growth in HPC while giving its Foods business a partner better suited to unlock its potential.

💰 The Deal's Financial Mechanics

The transaction is structured as a "Reverse Morris Trust," designed to be tax-efficient.

• What Unilever Gets: $15.7 billion in cash and a 65% ownership stake in the newly combined McCormick-Foods company.
• What McCormick Shareholders Get: 35% of the combined company.
• What Unilever Keeps: A 9.9% stake, which it plans to sell later.
• Valuation: The Foods business is being valued at ~$45 billion (3.6x sales, 13.8x EBITDA). Unilever says this is in line with its own trading multiple and top food company valuations.

🚀 Why Unilever Is Excited: The New HPC Focus

The new Unilever will be a "pure-play" HPC company. Here’s what makes management optimistic:

• Stronger Growth Profile: It will have greater exposure to high-growth categories (beauty, wellness) and faster-growing markets like the U.S. and India (38% of turnover).
• Better Margins: The mix shift is expected to lift gross margins to over 48%.
• Past Success: Unilever notes that its HPC division has already outperformed peers, with 2.5% volume growth and 5.4% annual sales growth over the last 3 years.
• Clear Strategy: Continued focus on its 7 priorities, including investing in "power brands" like Dove and scaling digitally-native brands.

📦 The New Flavor Powerhouse: McCormick + Unilever Foods

Why McCormick? The companies see massive complementarity.

• Iconic Brands: Combining McCormick's spices with Unilever's Knorr, Hellmann's, and Cholula.
• Geographic Fit: McCormick is strong in North America; Unilever has deep emerging market reach.
• Channel Synergy: Unilever has strength in retail; McCormick has a large food service business (supplying restaurants).
• Synergies: They expect $600 million in annual cost savings by year 3, with $100 million reinvested for growth.

🔮 The Road Ahead & Key Details

Timeline: The deal is expected to close by mid-2027, pending shareholder and regulatory approvals.
Leadership: The new flavor company will be headquartered in the Netherlands and keep its New York listing with a secondary European listing. Unilever will appoint 4 of 12 board members.
India Stays: Unilever's India Foods business is a special case and will remain with the new Unilever HPC company.
Separation Costs: Unilever estimates €400-500 million in "stranded costs" (like shared IT) but has a €500 million restructuring plan to offset them, spread over 2027-2029.

⚖️ Risks & Analyst Concerns

During the Q&A, executives addressed several concerns from analysts:

• Stranded Costs: Confirmed they will be fully mitigated and are not expected to dilute margins.
• Leverage in New Co: The combined flavor company will start with high debt (~4x EBITDA). Unilever said this was part of the deal's financial structure and confidence is high it can be reduced to 3x within 2-3 years.
• Customer Conflicts: McCormick's ingredients business supplies some competitors. Unilever said McCormick has a proven track record of managing this and due diligence didn't raise issues.
• Execution Risk: Management argued their experience with the recent ice cream separation de-risks this larger split.

🧠 The Analogy

Think of Unilever as a large, successful general store that owned both a popular hardware section (Foods) and a growing beauty counter (HPC). They've decided the beauty counter is where the future is brightest. So, they’re partnering the hardware section with a specialized toolmaker (McCormick) to create the best hardware store in the world. Meanwhile, they’re transforming their own store into a sleek, high-end beauty boutique. Both new stores can now focus entirely on their best customers.

📇 Key Contacts & People

• Fernando Fernandez: CEO & Director, Unilever PLC
• Srinivas Phatak: CFO & Director, Unilever PLC
• McCormick Investor Relations: McCormick & Company, Incorporated, 24 Schilling Road, Suite 1, Hunt Valley, Maryland 21031.
• Unilever Investor Relations: 100 Victoria Embankment, London EC4Y 0DY, United Kingdom.
• SEC Filings: Available at www.sec.gov. McCormick's documents also at https://ir.mccormick.com/.

🧩 Final Takeaway

Unilever is executing a monumental split to unlock value. It is betting that a focused, high-growth HPC company and a merged flavor giant with McCormick will each outperform as independent entities. The success hinges on navigating a complex separation, achieving synergies, and proving the new Unilever can sustain its premium growth without the steady cash flow from foods.