McCormick & Co. has agreed to purchase the food division of Reckitt Benckiser for $4.2 billion, according to a company announcement Wednesday (July 19). The deal includes the brands Frank’s RedHot Sauce, French’s Mustard and Cattlemen’s barbecue sauce. The pro forma annual sales revenue is projected at $5 billion, according to the release.
McCormick will integrate RB Foods into its consumer and industrial segments and will retain the brand names of French’s, Frank’s RedHot and Cattlemen’s.
Both McCormick and Reckitt Benckiser operate sales offices in Benton County for their Wal-Mart teams. It remains unclear if the deal will mean any of those local jobs are lost with this merger.
“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,” Chairman and CEO Lawrence E. Kurzius said in a statement. “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 said the iconic brands are nice complement that will likely strengthen McCormick’s expanding condiment businesses in the U.S. and abroad.
“This transaction reinforces our focus on growth, reflecting McCormick’s commitment to making every meal and moment better and driving significant shareholder value,” Kurzius added. “We have great respect for RB Foods and the strong business its employees have built. McCormick will be able to grow these brands in new and unique ways through our proven track record of insight-driven innovation and the ability to leverage our global footprint.”
As a result of increased scale, McCormick expects to achieve cost synergies of approximately $50 million, according to the release, the majority of which will be achieved by 2020, with anticipated synergies split between selling, general and administrative expenses and cost of goods sold.
The transaction is expected to be completed in the next two quarters of McCormick’s fiscal 2017, pending regulatory approval. McCormick said it got a bridge loan to finance the deal and expects to roll that into permanent financing with a combination of debt and equity options.