McCormick & Company (MKC)

McCormick & Company is no longer just "the spice company." On 31 March 2026, McCormick announced it is combining with Unilever's entire global Foods business — the division that owns Hellmann's, Knorr, and Marmite — in a Reverse Morris Trust transaction valued at roughly $65 billion combined. This is the single biggest corporate event in McCormick's history, and it is the lens through which every other number in this report should be read.

Under the deal terms, McCormick will pay Unilever $15.7 billion in cash plus issue stock, with Unilever's Foods business valued at approximately $44.8 billion against McCormick's standalone value of roughly $21 billion. When the dust settles (expected mid-2027 at the earliest, pending shareholder and regulatory approval), legacy McCormick shareholders will hold approximately 35.0% of the combined company, Unilever's own shareholders will hold 55.1%, and Unilever itself will retain 9.9% — meaning Unilever and its shareholders together control roughly 65% of the new entity. The combined company keeps the McCormick name and its Hunt Valley, Maryland headquarters, but adds an international HQ in the Netherlands plus a secondary European stock listing.

That is a lot of change for a 137-year-old company best known for black pepper and Old Bay seasoning. The market's initial reaction was brutal — MKC shares are down roughly 35% over the past year, pricing in real dilution and integration-risk concerns. But the standalone business heading into this merger is, by most measures, performing well: Q2 FY2026 adjusted EPS of $0.80 beat estimates, revenue grew 16.7% (helped by the newly consolidated McCormick de Mexico), and full-year guidance was reaffirmed.

Business today, pre-merger: McCormick operates two reporting segments. The Consumer segment (retail spices, seasonings, condiments — the McCormick, Frank's RedHot, French's brands) posted $1.14 billion in Q2 FY2026 sales, up 20.4% in constant currency, largely boosted by the McCormick de Mexico consolidation. The Flavor Solutions segment (B2B flavors for food manufacturers and restaurant chains) generated $793.9 million, up 5.9% in constant currency, with margins expanding 210 basis points to 15.1% — a sign the industrial/foodservice side of the business is executing well on price and mix.

A second, smaller but relevant corporate action: on 2 January 2026, McCormick closed the acquisition of an additional 25% stake in McCormick de Mexico from Grupo Herdez for $750 million, lifting its ownership from 50% to 75%. This deal is important context for the earnings-quality discussion in the Financials section — it triggered a large one-time non-cash accounting gain that distorts reported GAAP earnings.

Shariah compliance status: COMPLIANT. McCormick is confirmed Shariah-compliant per Zoya's US stock screening reference, meaning its core business (food, flavors, condiments) and financial ratios (debt, interest income, non-compliant revenue) fall within acceptable Shariah investment thresholds as of the latest screening date. Note for investors: the leverage McCormick is taking on to fund the Unilever cash payment ($15.7 billion bridge facility plus a $2.0 billion term loan) will materially increase the company's debt load, and Shariah compliance should be re-checked once the merger closes and pro forma balance sheet figures are finalized, since debt ratios can shift compliance status.

Q3 FY2026 (quarter ended 31 August 2026) was a clean operating beat with weak volumes. Net sales were $2,024.8M, up 17.4% (16.5% in constant currency). Organic growth was only 1.9%: price added 2.2% and volume/mix subtracted 0.3%. McCormick de Mexico added 14.6 points.

By segment, Consumer sales were $1,215M (+24.9%, organic +1.1%) and Flavor Solutions $809M (+7.7%, organic +3.0%). Adjusted operating income grew 24% in Consumer and 18% in Flavor Solutions.

Balance sheet at 31 August 2026: cash $331M against total debt of $5.0B, of which $2.1B is short-term. Nine-month operating cash flow was $599M vs $420M a year ago.

McCormick declared a quarterly dividend of $0.48 per share, payable 26 October 2026 to holders of record on 13 October 2026. It marks the 102nd consecutive year of dividend payments, and the company has raised its dividend for about 40 years in a row.

The yield is at the upper end of McCormick's own history because the share price fell, not because of a special payout.