FDBusiness.com

McCormick & Company, the US-based ingredients producer, is acquiring the food business of Reckitt Benckiser Group, the consumer health and hygiene company, for $4.2 billion. Reckitt Benckiser’s food business, which incorporates Frank’s RedHot Hot Sauce, French’s Mustard and other iconic, market-leading products, will strengthen McCormick’s leadership in the attractive condiments category in the US.

Operating facilities in 27 countries and with $4.4 billion in annual sales, McCormick manufactures, markets and distributes spices, seasoning mixes, condiments and other products to retailers, food manufacturers and food service operators. The Americas accounts for 67% of group revenue, 20% is generated by EMEA (Europe, Middle East & Africa) and 13% from the Asia Pacific Zone.

McCormick will integrate RB Foods into its Consumer and Industrial segments. Combined pro forma 2017 annual net sales of the enlarged McCormick are expected to be approximately $5 billion with significant margin accretion. As a result of increased scale, McCormick expects to achieve cost synergies of approximately $50 million, the majority of which will be achieved by 2020.

“The acquisition of RB Foods strengthens McCormick’s flavor leadership with the addition of the iconic French’s and Frank’s RedHot brands to our portfolio, which will become our number two and number three brands, respectively,” says Lawrence E Kurzius, chairman, president and chief executive of McCormick & Company. “RB Foods’ focus on creating products with simple, high-quality ingredients makes it a perfect match for McCormick as we continue to capitalize on the growing consumer interest in healthy, flavorful eating.”

He adds: “RB Foods’ track record of creating market-leading products and its dedicated state-of-the-art manufacturing facility are a strong complementary fit that we expect will strengthen McCormick’s business opportunities as we expand our presence in condiments, a core category for the Company in the US and internationally.”