Photographer: Chris Ratcliffe/Bloomberg

McCormick to Buy Reckitt Food Unit for $4 Billion, FT Says

Updated on
  • Acquisition includes French’s mustard, Frank’s RedHot sauce
  • Reckitt announced plans in April to sell its food business

McCormick & Co. agreed to acquire Reckitt Benckiser Group Plc’s food business for more than $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 $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 U.S. candy operations.

‘Non-Core’ Business

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 pounds ($536 million) in sales last year, French’s Foods accounted for 4 percent 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.

Reckitt’s acquisition of Mead Johnson, announced in February, was an “inflection point” for the company, Chief Executive Officer Rakesh Kapoor has said. He cited urbanization, changes to China’s one-child policy and increasing rates of women entering the workforce as reasons for entering the infant-nutrition market, which he sees growing at 3 percent to 5 percent a year in the medium term.

Reckitt has owned French’s since the 1920s. The brand is concentrated in the U.S., where it competes with Kraft Heinz’s products.

McCormick dates to 1889, when founder Willoughby McCormick began selling flavors and extracts door to door. The company has grown to more than $4.4 billion in sales.

It went after another U.K. business in 2016, when McCormick considering buying Premier Foods Plc. But the suitor walked away from takeover talks in April of that year, saying that Premier was demanding too high a price. That bid would have valued Premier at about $2.1 billion.

McCormick CEO Lawrence Kurzius said at the time that Premier was just one of the company’s M&A ideas.

— With assistance by Ruth David, and Ed Hammond

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE