(Nov 11): Unilever plc and spice maker McCormick & Co’s US$44.8 billion (RM181.56 billion) deal faces an in depth investigation unless the firms offer remedies to allay the watchdog’s competition concerns.

The Competition and Markets Authority (CMA) said McCormick’s acquisition of Unilever’s global food business can lead to “substantial lessening of competition” in the supply of dry ingredient and sauces in the UK. The two companies have until Nov 18 to offer undertakings to avoid a deeper so-called phase 2 investigation, the CMA said in a statement.

McCormick Shares were down 2.4% by 9am in London, while Unilever remained unchanged.

The decision could potentially create a regulatory hurdle for the ambitious transaction, the biggest in the histories of both companies, but offers the firms a way out. The combination can place Unilever as a global leader in beauty, personal and home care while turning McCormick into a global packaged food business leader. 

McCormick agreed to pay US$15.7 billion in cash while Unilever and its shareholders will receive shares equivalent to 65% of the combined company. The transaction values Unilever’s food business at about US$44.8 billion. Unilever shareholders will own 55.1% of the combined company, while Unilever itself will retain a 9.9% stake.

The transaction is part of Unilever chief executive officer Fernando Fernandez’s effort to focus the consumer-goods company on beauty, wellbeing, personal care and home care, businesses that he argues offer stronger growth prospects.

Unilever’s best-known food brands include Hellmann’s mayonnaise and Knorr stock cubes, alongside regional brands such as Colman’s mustard and Marmite.

“As announced in August, a decision had already been taken to market the Colman’s brand and assets for sale to proactively address potential competition concerns. Discussions with potential buyers are progressing well,” Unilever said in a statement. 

The announcement was an expected step and the two companies were confident in timely closing of the deal, their spokespeople said in separate statements. 

Uploaded by Felyx Teoh