Photo by Mike Mozart on Flickr.
"The taste you trust" is adding some pretty heavy hitters to its arsenal of flavorings and seasonings.
Spice-making giant McCormick has officially agreed to acquire the foods division of Britain's Reckitt Benckiser Group PLC for $4.2 billion. As part of that takeover, McCormick becomes the owner of several brands of condiments that we know and love here in the United States, including French's Mustard, Frank's Red Hot Sauce, and Cattlemen's barbecue sauce.
Reckitt Benckiser put their foods segment, known as RB Foods, up for sale three months ago as they looked to narrow their focus into home and personal care offerings. RB Foods only generated about $536 million in revenue last year, but its operating margins of about 27% are some of the best in the packaged food industry, making the deal a very attractive buy.
McCormick expects to save about $50 million in costs as a result of their new deal while targeting a $5 billion sales number for 2017. Reckitt will use proceeds from the sale to pay down debt.
As for the new brands McCormick controls, expect them to continue to sell well in the U.S., especially with French's being the top-selling mustard in the country already. McCormick also plans to jump further into the hot sauce market, which is growing robustly, with its integration of Frank's Red Hot Sauce.
Whether that means we'll be seeing Frank's Red Hot-inspired spice blends in the years to come or not, I don't know. Certainly, however, McCormick is stepping up its packaged food game with this acquisition of some pretty notable American brands.
