Jim Armitage: Reckitt Benckiser's food deal cuts the mustard

Reckitt Benckiser has put its food division which besides French's includes Frank's Red Hot and numerous other brands up for sale in an effo
French's brand mustard is seen on a supermarket shelf amongst other brands in New York on Monday

20 July, 2017

It said it would integrate the business, RB Foods, into its consumer and industrial segments, and retain the top brand names like French's, Frank's RedHot and Cattlemen's.

Lawrence E. Kurzius, chairman, president and CEO of McCormick, said RB Foods' focus on creating products with simple, high-quality ingredients makes it a flawless match for McCormick as it continues to capitalize on the growing consumer interest in healthy, flavorful eating. Rakesh Kapoor, Reckitt's chief executive, said that the deal marked "another step" in its transformation following its $16.6 billion acquisition of Mead Johnson. Reckitt Benckiser's brands include Enfamil, Nutramigen, Clearasil, Lysol, Veet, Calgon, Woolite and Air Wick.

McCormick & Co agreed the deal after previous hopefuls, Anglo-Dutch giant Unilever and Spam-maker Hormel Foods, decided not to bid, says the Financial Times.

The UK maker of French's mustard, Nurofen and Durex condoms is poised to offload its food division to USA consumer good firm McCormick.

Drax slumped as it posted a statutory pre-tax loss of £83m for the first half of this year compared to a £184.2m profit in the same period last year, while BHP Billiton nudged down after a mixed production update.

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The move is part of the Reckitt Benckiser's plan to fund its £14.3bn purchase of United States baby food maker Mead Johnson Nutrition, agreed in February.

The consideration of $4.2bn is subject to customary working capital adjustments at completion, with RB planning to use the net proceeds to reduce its debt.

McCormick, which expects the hot sauce category to continue seeing robust growth, has been trying to expand.

The owner of Mr Kipling cakes and Oxo stock cubes rejected its advances twice.

"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", said McCormick President and CEO Lawrence E. Kurzius in a statement.

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