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Unilever has agreed to merge its food business with US rival McCormick in a £33.8 billion deal.

The two companies said they were in late-stage talks regard the move earlier on Tuesday but have now confirmed a deal.

It will create a major food giant, combining brands including Unilever’s Hellmann’s and Marmite with McCormick’s French’s mustard and Schwarz.

Unilever said it will receive about 15.7 billion dollars (£11.9 billion) of cash upfront and equity in McCormick.

Unilever and its shareholders will also retain a 65% stake in the Unilever Foods business, with Unilever shareholders owning 55.1% of the business and the Unilever itself retaining a 9.9% stake.

It means the Unilever Foods business – which also includes brands such as Knorr and Colman’s mustard – is valued at 44.8 billion dollars (£33.8 billion).

Fernando Fernandez, chief executive of Unilever, said: “We are unlocking trapped value through a growth-led separation of foods, creating a scaled, global flavour powerhouse.

“By combining Unilever Foods’ iconic leading brands and global reach with McCormick’s exceptional portfolio, category expertise and capabilities, we are establishing a focused, high-quality business with significant top line growth and value creation potential.”

Bosses said the deal is expected to complete by mid-2027.

The combined company said it hopes to secure around 600 million dollars (£453.2 million) of cost efficiencies each year as a result.

The deal for the food unit would mark a significant overhaul for the multinational business which owns household name food brands including Hellmann’s, Colman’s and Marmite.

Selling the food business will leave it with a collection of major beauty, personal and home care labels such as Dove, Radox, Vaseline and Persil.

Beauty and wellbeing brands have been selling particularly well in recent months, according to its latest results.

Last year, the group spun off its ice cream business to create the Magnum Ice Cream Company, which it floated with a primary listing in Amsterdam and secondary listings in New York and the UK.

It has also sold off a number of food brands, including snacking business Graze and plant-based brand The Vegetarian Butcher, in recent years.

On the other hand, it has sought to grow its personal care business over the past year with deals to acquire the fast-growing Wild and Dr Squatch brands.

Unilever also confirmed it was temporarily freezing recruitment in a bid to rein in costs amid the global turbulence caused by conflict in the Middle East.

A spokesperson for Unilever said: “Reflecting the uncertain external environment, we have decided to put in place a temporary pause on our recruitment.

“We remain an agile business and will always adjust our plans as necessary.”