A complicated exit: RBC wary of Unilever’s food reshuffle

Investing.com -- RBC Capital is skeptical of Unilever’s planned overhaul of its food portfolio, warning that the proposed transaction with McCormick raises more questions than it answers.

The firm, which rates the shares at Underperform with a 4,200p price target, said it is “not overly impressed” by what has been outlined so far.

Unilever indicated that a deal could include an upfront component of $15.7bn in cash, with the rest in McCormick equity, leaving the company with a 65% stake in the new entity.

That structure “would hardly be a clean exit,” analyst James Edwardes Jones wrote.

Excluding the India foods unit, which is estimated at 11% of the business, RBC Capital said brands such as Hellmann’s and Knorr represent roughly two-thirds of the division’s value.

The concern, analysts said, is that Unilever appears to be moving from “full ownership of one dominated by just two brands” to partial ownership of a far less focused business. “That doesn’t sound terribly appealing to us,” RBC Capital wrote.

A later update from the firm said the deal terms are “much as foreshadowed,” with Unilever’s 65% stake split between shareholders and the company, alongside €6bn in planned buybacks through 2029 and $600 million in synergies.

Still, RBC Capital remains “unimpressed,” adding that the transaction shows “minimal control premium” and leaves shareholders with a complex, sprawling food operation.

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