Reckitt Benckiser foods - Frank's Red Hot Sauce, French's mustard, Cattlemen's barbecue sauce
Brands that will be a part of the acquisition include French’s, Frank’s RedHot and Cattlemen’s.

SPARKS, MD. – McCormick & Co. has entered into an agreement to acquire the food business of the Reckitt Benckiser Group, Parsippany, N.J., for approximately $4.2 billion. Brands that will be a part of the acquisition include French’s mustard, Frank’s RedHot and Cattlemen’s.

Lawrence Kurzius, McCormick
Lawrence E. Kurzius, chairman, president and c.e.o. of McCormick

“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 No. 2 and No. 3 brands, respectively,” said Lawrence E. Kurzius, chairman, president and chief executive officer. “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.”

RB Foods is forecast to generate $581 million in revenue during 2017 with an adjusted EBITDA of $215 million, according to McCormick. The two businesses combined will have approximately $5 billion in sales.

The hot sauce category will continue to see robust growth, according to McCormick, and there are significant opportunities for expansion. McCormick said it expects growing global millennial household penetration to create substantial upside for Frank’s RedHot and the other acquired brands, increasing their respective consumer bases.


“(The) Frank’s RedHot Sauce business is actually the largest piece of the business; it’s quite a bit bigger than mustard,” Mr. Kurzius said July 19 during a conference call to discuss the transaction with securities analysts.

He added that the company sees an opportunity to grow the presence of French’s mustard at food service.

“This transaction increases our Industrial segment sales in the U.S. and Canada, in the branded food service channel by over 50% and we will further leverage complementary distributor relationships,” Mr. Kurzius said. “In our Consumer segment, we have growth opportunities to a full product portfolio offering.”

With the increased scale, McCormick expects to achieve cost synergies of approximately $50 million, the majority of which will be achieved by 2020, with anticipated synergies split between selling, general and administrative expenses, and cost of goods sold.

Michael Smith, McCormick
Michael R. Smith,c.f.o. of McCormick

“We expect to incur approximately $140 million of transaction and integration costs, with the majority to be incurred in 2017,” said Michael R. Smith, chief financial officer, during the conference call. “This will include noncash charges related to purchase accounting. We also expect to incur increased annual amortization in the $20 million to $25 million range.

“Finally, in terms of our capital structure, McCormick expects permanent financing of the transaction to consist of approximately $3.7 billion of new debt, including pre-payable term loans and notes and $500 million in equity.”

During the conference call, Mr. Kurzius said McCormick had identified Reckitt Benckiser’s food business as a strategic fit many years ago.

“… I would say that over the last decade, whenever we've looked at big ideas, … the opportunity to acquire RB Foods was really very near or either at or very near the top of the list,” he said. “One of the advantages that we’ve got in the center store of course is that herbs, spices and seasoning continue to be a growing category; consumer demand for flavor continues to be very strong. As a portfolio, these brands that we’re acquiring show similar characteristics. The organic growth rate of these brands is comparable to ours.”

The acquisition is contingent on customary approvals and is expected to close during the third or fourth quarter of McCormick & Co.’s fiscal 2017.