On March 31, 2026, Unilever PLC announced the combination of its foods division (Foods) with McCormick & Company. The deal would unite brands such as Knorr (bouillon), Hellmann’s (mayonnaise), and Marmite (yeast extract) with McCormick’s popular spice and condiment lines—a “global flavor powerhouse.”

Although food company mega-mergers have a checkered history, some prognosticators are bullish on the McCormick-Unilever transaction (others aren’t). This optimism stems, in part, from the transaction’s tax structure—a reverse Morris Trust (RMT) with a 9.9% interest retained by Unilever in the McCormick-Foods public company. More on the deal structure, the tax stakes, and where this transaction fits in the recent wave of RMTs, below the fold.

An RMT is a tax-free separation followed by a tax-free combination in which the seller-side shareholders end up in control of the combined company—so the spin isn’t treated as part of a taxable takeover. In the ideal version of the McCormick-Unilever transaction:

• Step 1: Unilever, an English public limited company, will sell certain foods-related assets directly to McCormick, a Maryland corporation, for $15.7 billion in cash. These purchases will be financed by a bridge loan or permanent financing. (After the transaction, McCormick will be highly leveraged, which is something to watch post-closing.)
• Step 2: Unilever will transfer the rest of its foods-related assets to Foods, a Delaware corporation. To the extent that the initial asset sales yield less than $15.7 billion in cash, Foods will distribute an intercompany note to Unilever for the balance.
• Step 3: Through a Dutch intermediary, Unilever will spin-off approximately 85% of Foods’ stock to its public shareholders and retain the other 15% (diluted to 9.9% after Step 4). This spin-off is intended to be fully tax-free. Unilever’s retained interest in Foods is carefully titrated to fit § 355(a)(1)(D)(ii)’s “distribution of control” requirement (19.9% cap) and avoid post-acquisition “insider” status under the Securities Exchange Act of 1934 (9.9% limit).
• Step 4: McCormick will acquire Foods in an all-stock reverse subsidiary merger. Immediately afterwards, Foods will merge with and into a newly formed Delaware limited liability company. This acquisition is intended to be fully tax-free under § 368(a)(1)(A) through Rev. Rul. 2001-46—an easier route to qualification than the triangular A provisions.

When the dust settles, Unilever’s public shareholders will own 55.1% of McCormick’s common stock, and Unilever’s Dutch subsidiary will own an additional 9.9%, for a total of 65% of the combined company. Under § 355(e), this 65% seller-side stake preserves the spin-off’s tax-free treatment at the corporate level. And that’s what makes this deal a reverse Morris Trust: a tax-free spin-off, followed by a tax-free acquisition of the spun-off company that does not trip § 355(e)’s 50% buyer-side ownership threshold.

The deal’s public filings include two interesting contingencies, should the transaction’s ideal version fail to reach fruition. Closing is slated for mid-2027, and the process is expected to be “messy, slow, and complicated.” So these contingencies may matter in this deal’s ultimate resolution.

First, Unilever may elect to distribute all of Foods’ stock, rather than retain 15%. Unilever presumably will seek an IRS private letter ruling on the spin-off, and specifically on whether the retained interest has a principal purpose of tax avoidance. This ruling request would track Rev. Proc. 2024-24, which gives modestly stricter requirements for retained interests (and less optionality) than prior guidance.

Although an IRS ruling is not mentioned in the current public filings, Unilever is familiar with this administrative hurdle. In November 2025, Unilever divested its ice cream business, including Ben & Jerry’s (perhaps over political concerns), as The Magnum Ice Cream Company. This divestment was structured as a tax-free spin-off of Magnum with a 19.9% interest retained by Unilever, with a planned sell-down over the subsequent five years. And Unilever sought and received a favorable private letter ruling on the retained interest point (presumably PLR 202552006).

More importantly, any IRS ruling received by Unilever in the McCormick deal may shed more light on Treasury’s thinking on post-spin-off retained interests after the Trump Administration withdrew (in September 2025) proposed Biden-era rules on the topic (from January 2025). These proposed regulations would have offered a clear non-ruling route for retained interests while tightening the requirements to do so. Seller-side retained interests also may serve an insurance-like role against post-closing violations of § 355(e)’s ownership requirements—Unilever controls what happens to its retained stakes. As Treasury’s thinking on this topic evolves, the Unilever-McCormick transaction may prove a bellwether.

Second, Unilever may scrap the whole tax-free thing and just sell its foods-related assets to McCormick in a fully taxable transaction. That’s, um, a pretty radically different deal from a RMT, especially in terms of the transaction costs associated with professional advice. This structural optionality is very different from the protective § 336(e) elections common among RMTs (and primary in the failed Netflix-Warner structure). The current public filings may contemplate a restructuring that requires exactly such an election. But this feature—an open-textured out, should the RMT prove unworkable—is something to keep an eye on as more of the transaction’s infrastructure becomes public.

Overall, the Unilever-McCormick deal illustrates market trends that favor spin-offs and RMT structures as mechanisms to reconfigure exposure to an unwanted business, rather than completely sever economic relationships. As analysts (and markets) have noted, Unilever’s disposition of Foods is “hardly a clean exit.” For Unilever, there’s partial monetization in the pre-spin-off asset sale to McCormick; a rebalancing of capital structure in McCormick’s increased debt load, and continued exposure to the foods business over the mid-term. Unilever also will appoint four members of McCormick’s twelve-member board, with at most one board member with direct ties to Unilever (relevant to the IRS ruling!). Like Unilever’s divestment of Magnum, this deal yields an explicit network of ties and economic relationships between the two companies, rather than a true parting of ways.

Finally, the Unilever-McCormick deal should be situated within the cluster of public company RMT deals that emerged around 2020. These deals include 3M-Neogen, AT&T-Discovery (WarnerMedia), BD-Waters, Berry-Glatfelter, Jacobs-Amentum, McKesson-Change, Pfizer-Mylan (Upjohn), and Trane-GDI (Ingersoll-Rand). Cataloging these rare-but-salient deal structures helps map the trajectory of post-pandemic M&A, especially if Unilever’s retained interest strategy represents an evolution in the legal technology that underlies these deals.

Moreover, in coverage of the Unilever-McCormick deal, the Wall Street Journal discusses a forthcoming study from Emilie Feldman and Constance Helfat that surveys forty-nine RMTs from 1998 to 2023 and finds that these structures outperform conventional acquisitive mergers after the first two years. The tax side of this emerging research warrants further exploration: if the tax strictures imposed by Congress and Treasury yield salubrious outcomes, they do in uncoordinated and probably unintended ways. Future tax-related administrative guidance and legislative reform should guide this regime towards the positive outcomes identified by Feldman and Helfat. (Look for TaxProf Blog coverage of their article when it’s public!)