The sale of the French’s Food business will allow McCormick to retain the brands French’s, Frank’s RedHot and Cattlemen’s.
Reckitt Benckiser ceo Rakesh Kapoor said: “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.”
‘Global platform’
The disposal, which followed the acquisition of Mead Johnson Nutrition, would allow the Slough-based manufacturer to focus on its health and hygiene business, said Kapoor.
“This transaction marks another step towards transforming Reckitt and Benckiser 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,” he said.
The deal will enable McCormick to become “a stop-one shop for condiment, spice and seasoning needs”, its chief executive Lawrence Kurzius told BBC News.
The sale is expected to be finalised in the third quarter of this year, subject to regulatory approvals.
Changing consumer tastes
Meanwhile, McCormick’s acquisition of the Reckitt Benckiser condiment business will allow it to capitalise on changing consumer tastes, predicted financial specialist Lesmoir-Gordon Boyle & Co. Read more details in the box below.
US herb and spice manufacturer McCormick secured the deal after fighting off competition from rival suitors Hormel Foods and Unilever.
McCormick’s successful bid followed its much publicised failure to take over Premier Foods last year. The US firm ditched its bid for Premier after the Mr Kipling manufacturer said its successive offers undervalued the company.
In April FoodManufacture.co.uk reported Reckitt Benckiser had launched a strategic review of its French’s Food brand to help fund its £14.3bn takeover of baby food manufacturer Mead Johnson Nutrition.
What they say about the deal
“Reckitt Benckiser’s disposal of its condiments business will enable it to pay down debt and focus on its recent acquisition of Mead Johnson, and to seek to resolve matters following the Petya cyber-attack earlier this year,” according to Angus Grierson, md corporate finance with Lesmoir-Gordon Boyle & Co.
“McCormick will have relished the opportunity to snap up the well-known condiment arm of Reckitt Benckiser, enabling it to broaden its offering and capitalise on changing consumer tastes. Having acquired Enrico Giotti SpA last year, McCormick’s diverse spread of products will strengthen the brand within a highly competitive US spice market.”