McCormick Shares Slide to $50 on $44.8B Unilever Merger and 4.0x Leverage
McCormick’s shares have fallen to about $50 per share, trading at a 16-times earnings multiple, as investors worry its $44.8 billion merger with Unilever’s food business will raise leverage to 4.0x. Q1 revenue rose 16.7% and earnings 10%, while the combined firm targets $600 million in annual cost savings and 23–25% operating margins by year three.
1. Stock Reaction and Valuation
McCormick shares fell 5.3% to about $50, marking a 52-week low. The stock now trades at approximately 16x forward earnings, reflecting investor unease over the planned merger’s dilution and debt load. The deal will push leverage to a 4.0x ratio at close.
2. Q1 Performance
McCormick reported first-quarter revenue of $2.0 billion, up 16.7% year-over-year, and adjusted earnings growth of 10%. The company highlighted strong retail and foodservice demand in its core spice segments. Free cash flow remained solid, underpinning its 40-year dividend growth streak.
3. Merger Details and Outlook
The $44.8 billion agreement combines McCormick with Unilever’s food business into a $20 billion flavor company. Unilever shareholders will own 55.1% of the combined entity, which will launch at 4.0x leverage and targets reduction to 3.0x within two years. Management expects $600 million in annual cost synergies by year three and 23–25% operating margins, with closing slated for mid-2027.