McCormick Invests to Drive Volumes Even as It Prepares for Marriage With Unilever's Food Arm

Although McCormick is the leading player in the $17.5 billion global spices and herbs market—with about 17% share, nearly 4 times the next-largest branded operator (per Euromonitor)—it hasn't been immune to macro and competitive challenges. We don't think the combination with Unilever's food brands (primarily Knorr cooking aids and Hellmann's mayonnaise) negates these headwinds. Rather, we think the massive deal, which stands to more than double McCormick's sales base to around $20 billion, brings significant integration risk. However, we're encouraged that Unilever intends to own around 10% of shares outstanding while maintaining board and executive leadership representation, which we think could facilitate a more seamless combination.