Unilever has put 200-year-old English mustard brand Colman's up for sale to head off potential competition concerns over a planned food spin-off deal.
The FTSE 100 consumer goods group is combining its food business, which includes household names Marmite and Hellmann's, with United States spice manufacturer McCormick in a deal valued at £33 billion. However, Maryland-based McCormick already owns rival mustard brand French's, an overlap that risks attracting regulatory scrutiny from competition authorities.
Investment bankers at Rothschild have now been instructed to find a buyer for Colman's. Industry experts speculate that potential suitors could include Premier Foods, the food manufacturer behind Mr Kipling cakes, and Associated British Foods, the conglomerate that owns Twinings tea and Ryvita crispbreads.
Confirming the decision to sell, a spokesperson for Unilever said: "A decision has been taken to market the Colman's brand and assets to potential buyers in order to proactively seek to address potential competition concerns from the planned combination of Unilever Foods and McCormick." The company added that "discussions are ongoing and the operations continue as usual."
Valuation and market reception
It remains unclear how much the historic condiment brand could fetch, although a source told Sky News that the transaction value was "not material." Colman's had previously been subject to market speculation that Unilever might offload it alongside fellow British condiments Marmite and Hellmann's. Together, the three condiment brands generate annual revenues of around £200 million.
Dan Coatsworth, head of markets at financial services firm AJ Bell, noted that McCormick's existing product line made keeping Colman's unlikely. "McCormick already owns French's and a host of other mustard-related sauces and powders," Coatsworth said. "Colman's is synonymous with a Sunday roast or a ham sandwich in the UK but is less known beyond these shores. McCormick might believe the British brand doesn't cut the mustard and add anything to its portfolio."
Coatsworth added that there would still be strong interest from UK food groups. "There won't be a shortage of interested parties lining up to own the quintessential British brand, with Premier Foods and Associated British Foods likely to be in the frame as possible buyers," he said.
Heritage and manufacturing history
Founded by Jeremiah Colman in Norwich in 1814, Colman's grew into one of Britain's oldest food brands. However, after more than two centuries of production in Norfolk, Unilever shifted manufacturing in 2017 to facilities in Burton-on-Trent and Germany.
The sale process comes amid wider uncertainty for Unilever's domestic workforce. Earlier this year, Unilever chief executive Fernando Fernandez offered little reassurance regarding whether the McCormick transaction would impact jobs across the group's 6,000-strong United Kingdom workforce. Fernandez stated that the company would see "synergies play out" regarding UK manufacturing, raising fears of potential job cuts.
Investor backlash and City pressure
Fernandez has faced growing criticism from investors over the deal structure. Veteran fund manager Terry Smith, who sold his entire stake in Unilever earlier this year, remarked that the transaction bore "all the hallmarks" of billionaire activist investor Nelson Peltz.
Peltz, who joined the Unilever board of directors in 2022, is reported to have been a leading proponent of spinning off the food division. The activist investor has previously campaigned for structural changes at global food and beverage corporations including Cadbury and PepsiCo. Meanwhile, other investors in the City of London have expressed frustration that shareholders will not be given a vote on the tie-up.
