McCormick Buying Wuhan Asia-Pacific
The spice maker said it expects the deal to be completed in mid-2013 and added that Wuhan’s brand bouillon products complement McCormick's current portfolio of flavor products in China.
McCormick said that annual sales of Wuhan’s business are approximately $115 million and it anticipates continued annual sales growth of at least 10%. Sales of the Wuhan business have grown at a 25% compound annual rate from 2007 to 2011.
“McCormick first entered China more than 20 years ago to provide a local source of supply to industrial customers,” said chairman and CEO Alan Wilson.
“Today, McCormick is one of the leading brands of spices and seasonings, with particularly strong category share in the coastal regions. Across both our consumer and industrial business, we operate profitably in China and have grown sales at a 16% compound rate for the past five years.”
Wilson said that the acquisition of Wuhan extends McCormick’s “broad range of flavors in China with bouillon,” adding that in Wuhan’s top markets, more than half of consumers use chicken bouillon each day at every meal to enhance the flavor of their food.
“This business is strong in central China, which fits well with McCormick's presence in the coastal regions. With the addition of WAPC's [Wuhan] business and acquisitions completed in the past 12 months, we expect approximately 15% of 2013 sales to come from emerging markets, a significant increase from 10% in 2011," said Wilson.
“We are well on our way toward achieving our 2015 goal to have 20% of sales in emerging markets.”
WAPC was founded in 1998. The business has approximately 900 employees, a manufacturing facility located in Wuhan, China and a network of distributors that serves traditional markets as well as grocery stores.
McCormick said it expects the acquisition to increase earnings per share in 2014 and be fully accretive in 2015, once integration is completed.
In 2013, McCormick anticipates a “slightly dilutive impact” to earnings per share due to integration and financing costs, and an estimated $4 million in costs related to the completion of the deal.