The Week in Breakingviews: End of corporate empire

LONDON, April 5 (Reuters Breakingviews) - Welcome back! Donald Trump has promised to intensify attacks on Iran. Financial and commodities markets are bracing for a longer conflict. Whatever happens next, the damage is piling up. Let us know, opens new tab what you think. If this newsletter was forwarded to you, sign up here to ​get it in your inbox every weekend.

OPENING LINE

“Activist firm Palliser Capital has provided the answer to a question few would have thought to ask: what does ‌monosodium glutamate have to do with artificial intelligence?”

The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war. Sign up here.

Read more: Palliser’s spicy bet crystallizes Japan AI gambit.

FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK

1. Gasoline accounts for 2% of U.S. consumer spending, down from 5% in 1974. (Pricey oil still hurts)

2. Britain’s windfall tax on energy profits collected less than a quarter of forecast sum. (But governments like them)

3. Tanker traffic could take six to nine months to normalise after the Strait of Hormuz reopens. (Supply chains remain scrambled)

4. Derivatives markets expect the ECB and Bank ​of England to raise rates up to three times this year. (Stocks are more optimistic)

5. If SpaceX goes public at $1.8 trillion it will be valued at 100 times revenue. (Twice the dotcom average)

PULLING ​THE LEVER

Most corporate mergers fail to live up to their initial promise. That makes the tie-up between Lever Brothers and Margarine Unie in 1930 ⁠a rarity. The British soapmaker and the Dutch manufacturer of butter substitutes provided the mundane foundations for a multinational consumer goods giant that has survived for a turbulent century. Until this ​week, when Unilever (ULVR.L), opens new tab finally decided to cleave Hellmann’s mayonnaise from Dove soap by selling its food business to U.S. rival McCormick (MKC.N), opens new tab.

The split has been a long time coming. Executives and investors have endlessly ​debated the logic of housing the different products in a single company. As the Dutch journalist Jeroen Smit observed in “The Great Fight, opens new tab”, his corporate history of Unilever, buying a product to rub on your skin is a rational choice dominated by the left side of the brain. Choosing what to eat is a more emotional decision.

For years, Unilever bosses argued that the two sides benefited from jointly negotiating shelf space with large supermarkets. ​The rise of online retail undermined that logic. When Unilever dismantled its Anglo-Dutch holding companies in 2020, it removed an obstacle to corporate simplification. A fumbled attempt to buy drugmaker GSK’s (GSK.L), opens new tab toothpaste and ​painkiller business in 2022 signalled its ambitions. So did selling its tea business and spinning off Magnum ice cream. McCormick, which makes French’s mustard and Cholula hot sauce, will now take charge of what CEO Brendan Foley describes, opens new tab ‌as delivering “end-to-end flavor ⁠experiences to even more people around the world”. Shareholders were less enthusiastic.

What this means for Unilever is far from clear. The company fought off a takeover approach from Kraft Heinz in 2017, but its simplified London-listed structure gives it fewer defences if performance lags. Corporate cage-rattler Nelson Peltz still sits on the board. Unilever’s top executive ranks, which for decades maintained a careful balance between English and Dutch representatives, are now dominated by managers from South America and India. The McCormick deal gives them $15.7 billion in cash to play with. What Unilever does with that windfall will go ​some way to determining whether the company ​gets to celebrate a second century.

CHART OF ⁠THE WEEK

As the conflict in the Middle East enters its sixth week, consumers are mostly concerned about shortages of diesel and other oil-related products. For central banks, though, the impact on food prices is the more enduring headache. As Jon Sindreu explains, spikes in fuel costs can be quickly ​reversed. The psychological harm from paying more for food, though, tends to linger for longer.

THE WEEK IN PODCASTS

Dealmakers are behaving as if the ​conflict with Iran does ⁠not affect their business: Unilever’s decision to create a $66 billion mustard-to-mayo giant with rival McCormick is just the latest in a string of big deals announced this year. In the Viewsroom, opens new tab this week, Jeff Goldfarb and Yawen Chen joined Jonathan Guilford to debate whether the animal spirits in corporate boardrooms can survive the chill winds blowing through the world economy.

PARTING SHOT

One corporate giant whose warning lights are beginning to flash ⁠is SoftBank. The ​Japanese conglomerate led by Masayoshi Son has been an enthusiastic participant in the artificial intelligence boom, pumping as ​much as $65 billion into ChatGPT developer OpenAI. But as Karen Kwok and Liam Proud point out, SoftBank’s debt levels are showing the strain, placing a question mark over its future and the whole AI frenzy.

Want to receive The Week in Breakingviews ​in your inbox every Saturday? Sign up for the newsletter here.

Follow Peter Thal Larsen on Bluesky, opens new tab and LinkedIn, opens new tab.

For more insights like these, click here, opens new tab to try Breakingviews for free.

Editing by Aimee Donnellan; Production by Pranav Kiran

• Suggested Topics:
• Breakingviews

Breakingviews
Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on X @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

• X

• Facebook

• Linkedin

• Email

• Link

Purchase Licensing Rights

Peter Thal Larsen

Thomson Reuters

Peter is Global Editor of Reuters Breakingviews, based in London. He was previously EMEA editor, and before that spent four years in Hong Kong as Asia Editor, where he oversaw the launch of Breakingviews’ Asian edition. Prior to joining Reuters in 2009, Peter spent 10 years at the Financial Times, including five years as the paper’s banking editor, leading its award-winning coverage of the credit crunch. Between 2000 and 2004 Peter reported for the FT from New York, where he covered a range of stories including the 9/11 attacks and their aftermath. A Dutch national, Peter has degrees from Bristol University and the London School of Economics.

• Email