US Spice Maker McCormick & Company Will Acquire the Reckitt Benckiser Food Brands

McCormick & Company—the US spice maker—has just bought the Reckitt Benckiser food business in a deal worth about $4.2 billion in cash. Calling it a “perfect match” the Sparks, Maryland-based company won the bid after fighting off many rivals who also sought to purchase the business probably known best for making both French’s mustard and Frank’s RedHot brands. The two condiments will actually become McCormick & Company’s number two and number three in-house brands, respectively.

On Wednesday, the deal was disclosed on the London Stock Exchange, now with a combined annual group sales worth roughly $5 billion.

Announcing the buy, McCormick & Company CEO Lawrence E. Kurzius noted, “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.”

Reckitt Benckiser says that this deal is part of the company’s strategy to focus more on consumer health and hygiene products, a direction the company wanted to head in after buying the US baby formula maker Mead Johsons. You might recognize Reckitt Beckiser from its brands, which include: Nurofen, Woolite and Clearasil.

Indeed, Reckitt Benckiser CEO Rakesh Kapoor comments, “This transaction marks another step towards transforming RB into a global leader in consumer health and hygiene.”

In addition, Euromonitor International senior food analyst, Lianne van den Bos, explains, “McCormick’s acquisition of Reckitt’s food arm brings the company very close to Kraft Heinz’s leadership position in sauces, dressings and condiments in the U.S., with now just two percentage point difference in share.”

She also contributes that this deal will provide “plenty of opportunities” for McCormick & Company to reduce costs and also increase profits, which are key focus areas for many multinational companies this year, particularly those in staple foods.

All that in mind, McCormick & Company says it plans to strip out nearly $50 million in cost “synergies” once the takeover is complete; most of this should be finished by 2020.

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