Beating off other suitors like Unilever and Hormel, US spices, herbs and flavorings manufacturer McCormick & Company has jumped in to buy the food unit of UK-based Reckitt Benckiser.
Reckitt Benckiser was offloading its food unit prompting interest from multinationals from around the world, but has now announced that it has entered into an agreement to sell its Food business (RB Food or French’s Food), including the French’s, Frank’s RedHot and Cattlemen’s brands, to McCormick & Company Inc. for US$4.2 billion on a cash-free, debt-free basis.
The sale follows a comprehensive strategic review of French’s Food and the valuation achieved reflects the quality of this highly profitable, growth business, according to Reckitt Benckiser.
McCormick will retain the leading brand names of French’s, Frank’s RedHot and Cattlemen’s. RB Food’s focus on creating high quality products with simple ingredients makes it a strong match with McCormick.
Up until now, Anglo-Dutch conglomerate Unilever and canned meat producer Hormel were vying for position to get in on the deal and were reportedly the frontrunners.
McCormick cuts the mustard
However, McCormick has won through and the acquisition strengthens its position in the US sauce and condiments market.
McCormick, based in Baltimore, has been trying to expand for some time and had made a failed takeover bid for Premier Foods last year.
“Our French’s Food business is a true reflection of RB’s strengths – a portfolio of great brands driven through a culture of innovation by passionate people to deliver consistent outperformance,” says Rakesh Kapoor, Chief Executive Officer of RB.
“We are pleased to be selling to owners who can provide the necessary resources, market expertise and global platform, whilst being a good home for our people. French’s Food is well positioned to continue on its successful growth trajectory under the food-focused ownership of McCormick.”
“Following the acquisition of Mead Johnson Nutrition, this transaction marks another step towards transforming RB into a global leader in consumer health and hygiene, ensuring we continue to deliver for shareholders and give people innovative solutions for healthier lives and happier homes.”
The consideration is subject to customary working capital adjustments at completion and RB says it intends to use the net proceeds to reduce its debt.
The transaction is subject to certain regulatory approvals with completion expected during Q3 2017.