Artisan Partners Supports Unilever Food Business Merger

Artisan Partners Asset Management Inc. has expressed its support for the decision by Unilever PLC to merge its food business with McCormick & Company, Incorporated. The deal is seen as a strategic move to allow the consumer goods giant, headquartered in the United Kingdom, to focus more effectively on its core personal care and home care divisions. David Samra, managing director at Artisan Partners, noted that the transaction would create a more logical separation between the company's diverse interests. > The company will now more logically separate its interests in the food business and the personal care business. The merger, valued at approximately $65 billion, represents the second-largest transaction in the history of the food sector, surpassed only by the Kraft-Heinz merger in 2015. While Unilever's food division has historically provided high margins, its sales growth has lagged behind the company's beauty and wellbeing sectors. This performance gap has made it difficult for the group to reach its target of 4% to 6% underlying sales growth. Investor pressure on Unilever has mounted since 2022, when activist shareholder Nelson Peltz acquired a significant stake and joined the board. Artisan Partners, which holds a 1.22% stake in the company, is currently its ninth-largest investor. Samra suggested that the streamlined Unilever would likely see improved market valuation. > On a standalone basis, these businesses should be able to command a higher earnings multiple. The market response to the announcement was mixed, with Unilever shares dropping by 7% and McCormick shares falling by 5%. Some investors voiced concerns regarding the complexity of the deal, the potential for antitrust investigations, and the lengthy timeline required to finalize the merger. Artisan Partners has a reputation for advocating for corporate overhauls across Europe. In Germany, the firm has pushed for changes at Bayer AG, and it recently became a major shareholder in the Swiss-based BARRY CALLEBAUT AG-REG. Furthermore, in France, Artisan was instrumental in the 2021 leadership transition at Danone S.A., which resulted in a complete overhaul of the company's board and executive management.