McCormick Enters Agreement to Acquire Stubb's
Stubb's products include marinades, rubs and skillet sauces, and annual sales are project at $30 million
Stubb's is a premium barbeque sauce brand in the U.S. In addition to sauces, Stubb's products include marinades, rubs and skillet sauces. Annual sales of the business are projected to be $30 million in 2015 and are expected to grow at a double-digit rate annually for the next several years.
Stubb's products complement McCormick's range of grilling items with the addition of authentic, craft barbeque sauces. McCormick plans to drive sales of the Stubb's brand through expanded distribution, increased household penetration and innovative flavors.
McCormick has agreed to acquire the business for approximately $100 million in cash. Acquisitions are an important avenue of growth for McCormick. Stubb's is McCormick's third acquisition agreement announced in 2015.
Alan Wilson, Chairman & CEO of McCormick stated, "We are pleased to announce this agreement to acquire Stubb's. Based in Texas, Stubb's is an authentic, craft brand with an enthusiastic and loyal consumer base. Through marketing and innovation, we intend to build this base, increase household penetration and expand retail distribution in the U.S. and internationally. The Stubb's products round out the range of grilling products currently marketed by McCormick under the Grill Mates, Lawry's and McCormick brands. We look forward to working with the Stubb's employees to drive increased sales and profit for this business."
After opening his first Stubb's Legendary Bar-B-Q restaurant in 1968, C.B. Stubblefield began selling his popular sauces to retail grocers in 1992. These products feature bold flavors made of high quality ingredients from a man that knew BBQ. McCormick intends to maintain the headquarters of this business in Texas. With newly expanded distribution and product offerings, annual sales growth exceeded 20% in both 2013 and 2014. Annual sales of the business are projected to reach $30 million in 2015.
The acquisition should be completed by the end of July 2015, subject to regulatory approval. The purchase price for Stubb's is approximately $100 million subject to certain closing adjustments. Due to the estimated impact of transaction, integration and financing costs, McCormick expects no earnings per share impact in 2015 from this acquisition. However, with plans to achieve strong growth and significant cost synergies McCormick expects incremental EBITDA (earnings before interest, tax, depreciation and amortization) of at least $10 million by 2017.