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McCormick to buy Reckitt food unit for US$4b
[NEW YORK] McCormick & Co agreed to acquire Reckitt Benckiser Group Plc's food business for more than US$4 billion, a deal that would add French's mustard and Frank's RedHot sauce to the spice giant's lineup, the Financial Times reported.
After beating out a number of strategic bidders, McCormick could announce the deal as soon as Tuesday evening, said the newspaper, which cited unidentified people close to the situation.
The transaction would bring a stable of well-known condiments to Sparks, Maryland-based McCormick, which is best known for spices and seasonings. Reckitt, meanwhile, is unloading the products as part of an expansion into baby formula. The British consumer-products company acquired the pediatric-nutrition seller Mead Johnson Nutrition Co in a US$16.6 billion deal earlier this year.
Representatives for McCormick and Reckitt didn't have an immediate comment.
The deal comes as speculation swirls about the next round of consolidation in the packaged-food business. In February, Kraft Heinz Co was spurned in a blockbuster bid to take over Unilever, the Dutch-Anglo maker of Hellmann's mayonnaise and Knorr soup. In the aftermath of the failed Kraft talks, Unilever was cited by analysts as a possible bidder for the Reckitt business.
Nestle SA, the world's largest food company, also may be shaking up its portfolio. Under activist pressure to improve results, it's considering selling its US candy operations.
Reckitt said it was looking to unload its food business in April, when the Slough, England-based company described the division as "non-core." With £411 million (S$731.7 million) in sales last year, French's Foods accounted for 4 per cent of Reckitt's total revenue.
In acquiring Reckitt's food business, McCormick faced a large group of potential rivals. Bloomberg reported in May that the sale was expected to draw interest from Post Holdings Inc and Conagra Brands Inc. Other possible bidders included JM Smucker Co, Campbell Soup Co, Pinnacle Foods Inc and Ajinomoto Co, people familiar with the situation said at the time.
In addition to selling yellow mustard and hot sauce, the division makes ketchup, onion flavorings and other products.