McCormick takes over Reckitt Benckiser’s food unit for $4.2bn | Progresiv
McCormick will acquire Reckitt Benckiser’s food assets, including brands like French’s mustard and Frank’s RedHot sauce, after agreeing a $4.2 billion deal. 
The unit made $179 million in pre-tax profit in 2016, but is largely periphery for consumer goods giant RB, which performs much stronger in domestic products and personal care. Net revenue for the year was $564 million.
The sale comes three-and-a-half months after RB announced that it would offload the business, in the face of more than £4 billion’s worth of debt and having committed almost $18 billion to acquire infant formula manufacturer Mead Johnson – a deal it said would ‘significantly strengthen’ its position in developing markets.
It’s the latest chapter in the continuing saga of RB’s food spin-off, with the potential sale mooted in April before reports that the company was getting closer to a sale at the beginning of May.
Only this week, reports suggested that Unilever and Hormel Foods were the most likely suitors for the business. McCormick’s name was mentioned, too, but few observers saw the sale of the price reaching such a high figure.
The $4.2 billion involved is 1.5 times the amount speculated in April, when news of the sale emerged, and represents more than 23 times the annual profit of RB Food.
Reckitt Benckiser chief executive officer Rakesh Kapoor said: “Our French’s Food business is a true reflection of RB’s strengths – a portfolio of great brands driven through a culture of innovation by passionate people to deliver consistent outperformance. We are pleased to be selling to owners who can provide the necessary resources, market expertise and global platform, whilst being a good home for our people. French’s Food is well positioned to continue on its successful growth trajectory under the food-focused ownership of McCormick.”
The proceeds from the sale will be used to reduce Reckitt Benckiser’s burden of debt, after it came under pressure from investors following the Mead Johnson takeover.
“Following the acquisition of Mead Johnson Nutrition, this transaction marks another step towards transforming RB into a global leader in consumer health and hygiene, ensuring we continue to deliver for shareholders and give people innovative solutions for healthier lives and happier homes.”
