McCormick & Co. Inc. on July 18 announced an agreement to acquire Reckitt Benckiser’s Food Division (RB Foods) for $4.2 billion. The deal will add Frank’s RedHot sauce, French’s Mustard, Cattlemen's barbecue sauce and a handful of other brands to McCormick's small condiments business, primarily Lawry’s and Grill Mates.
It will advance the acquirer "from current position of No. 10 to a leading position in U.S. condiments category," according to McCormick.
Britain's Reckitt Benckiser Group Plc put the food business up for sale in April to help pay for its $16.6 billion acquisition of infant formula maker Mead Johnson Nutrition Co. Analysts at the time estimated that it could be worth $2.5-4 billion, but financial stories have reported a great deal of interest in the business. Most recently named were Hormel and Unilever.
Some reports put the RB unit's most recent sales at $564 million, with as much as $179 million in pre-tax profit.
Lawrence Kurzius, McCormick's chairman and president/CEO, noted "the iconic French’s and Frank’s RedHot brands … will become our number two and number three brands, respectively.” He also noted RB's products will benefit both McCormick's consumer and industrial businesses, and the deal comes with a manufacturing facility.
French's mustard is the leader in its category, and McCormick claims Frank’s RedHot sauce is "the number one brand in its market in the U.S and Canada" – something McIlhenny and its Tabasco brand may dispute.
The transaction is expected to be completed in the third or fourth quarter of McCormick’s fiscal 2017 (which ends Nov. 30).
