Reckitt Benckiser sells the food division to McCormick for $ 4.2 billion
The transaction should be completed by 2017
The American giant strengthens in seasonings
The American spice giant McCormick & Co. decided to acquire the food business of the English Reckitt Benckiser Group for $ 4.2 billion (about 3.6 billion euros), according to Bloomberg. French's mustard and Frank RedHot sauce are added to the McCormick portfolio along with other French Foods products (ketchup, aromas and other references).
The transaction should be completed in McCormick's third or fourth quarter of fiscal year 2017, pending regulatory approval, according to a statement released yesterday. McCormick expects to finance the deal with a combination of equity and debt, and saids that has obtained bridge loans.
With the deal, McCormick's pro forma 2017 sales expects an annual growth of about $ 5 billion (€ 4.3 billion), with significant margin growth, according to statements.
"The acquisition of RB Foods strengthens leadership in McCormick's condiments, thanks to the addition of iconic brands such as French's and Frank RedHot in our portfolio," said McCormick's chief executive officer Lawrence E. Kurzius. Credit Suisse Group AG is McCormick's Financial Advisor and Cleary Gottlieb Steen & Hamilton LLP is a legal advisor.
The deal comes after months of turbulent deals and rebuffs by major players in the industry. In February, talks were held between Reckitt and Kraft Heinz Co. After the bankruptcy of negotiations, Unilever (who already owns mayonnaise Hellmann and Knorr soups) seemed to be the most likely buyer, but there were also Post Holdings Inc. And Conagra Brands Inc., in addition to possible interest of JM Smucker Co., Campbell Soup Co., Pinnacle Foods Inc. and Ajinomoto Co.
In April, Reckitt had stated that he was trying to quit his food business, describing the division as "non-core": with 411 million pounds (464.5 million euros) in sales, French's Foods accounted for 4% of Total turnover of the group.
McCormick dates to 1889, when founder Willoughby McCormick began selling flavors and extracts door to door. The company has grown to more than $4.4 billion in sales (= € 3.8 billion).
© EFA News - European Food Agency Srl