Hot pursuit
Mccormick helps itself to Reckitt’s food business
Hannah Boland, Sam Dean Ashley Armstrong
THE Schwartz spices maker Mccormick has snapped up Reckitt Benckiser’s food business, in a deal worth more than £3bn, a year after failing to take over Premier Foods.
The US food company has beaten off rival bidders who were vying for the French’s mustard and Frank’s Redhot sauce division, including Dove soap maker Unilever and the US maker of Spam, Hormel Foods.
Mccormick has been trying to expand globally and sources said that it had been hungrily looking for a new overseas deal since walking away from the maker of Bisto and Mr Kipling cakes last year.
The Baltimore-based company said the move for Reckitt’s food business, first revealed by The Daily Telegraph three months ago, would catapult it to the top of the US condiments market, up from 10th position.
The acquisition also makes it the third largest condiments company in the world, behind only Unilever and Kraft Heinz, according to Euromonitor.
Lawrence E Kurzius, Mccormick’s chief executive, said French’s and Frank’s Redhot would become Mccormick’s second and third biggest brands respectively. “Reckitt Benckiser Foods’ focus on creating products with simple, high-quality ingredients makes it a perfect match for Mccormick as we continue to capitalise on the growing consumer interest in healthy, flavourful eating,” he said.
Reckitt Benckiser, which makes products ranging from Durex condoms to Gaviscon and Mr Sheen, launched a strategic review of the food division in April, culminating in the fiercely competitive auction process.
The food division had long been seen by the City as non-core to the rest of its consumer healthcare business, as French’s mustard and Frank’s Redhot sauce only generated 4pc of Reckitt’s total revenues.
However, the sale process was accelerated as Reckitt looked for ways to reduce its debt pile following its £14.2bn takeover of US baby formula maker Mead Johnson.
“Following the acquisition of Mead Johnson Nutrition, this transaction marks another step towards transforming RB into a global leader in consumer health and hygiene,” said Rakesh Kapoor, chief executive.
Reckitt said the £3.2bn valuation “reflects the quality of this highly profitable, growth business”.
The food division sells 160m bottles of French’s mustard a year and sales grew by 5pc last year to £411m, putting it favourably in comparison to other food divisions, which are struggling with slowing growth in the face of changing consumer tastes.
“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,” said Mr Kapoor.
Shares in Reckitt Benckiser rose by 125p, or 1.6pc, to close at £79.37.