Nurofen and Durex maker sells off food business in £3.2bn deal
Wed, 19 Jul 2017 | DIVISION SALE
The UK maker of French’s mustard, Nurofen and Durex condoms is poised to offload its food division to US consumer good firm McCormick.
Reckitt Benckiser, which also owns household brands Dettol, Cilit Bang and Lemsip, will sell off the division to the American firm in a deal worth $4.2 billion (£3.2 billion) after entertaining deals with Unilever and Hormel Foods.
It is understood that McCormick has identified hot sauce and seasoning products as fast-growing parts of the business, called RB Foods, and will retain top brands like French’s, Frank’s RedHot and Cattlemen’s.
The US seasoning maker has been trying to expand its global reach and last year approached Premier Foods, the owner of British names such as Mr Kipling and Oxo stock cubes, for takeover. McCormick was ultimately unsuccessful, however, after being unable to raise the cash necessary for the deal to go through.
Lawrence Kurzius, McCormick’s chief executive, said he hoped that the deal would render his firm “a one-stop shop for condiment, spice and seasoning needs”.
He added that he expects “meaningful accretion” to the food division’s margins and adjusted earnings. McCormick predicts that, as a combined entity, pro forma net sales are set to reach $5 billion.
According to research by business intelligence firm IBISWorld, the US sauce and condiments market is worth around $21 billion annually.
Reckitt Benckiser, on the other hand, will hope that proceeds from the sale will help pay off debts incurred after agreeing to buy maker Mead Johnson in a deal worth $16.6 billion.
The firm's CEO, Rakesh Kapoor, said: "Following the acquisition of Mead Johnson Nutrition, this transaction marks another step towards transforming RB into a global leader in consumer health and hygiene."
Credit Suisse is advising McCormick on the deal, while Cleary Gottlieb Steen & Hamilton LLP is the legal counsel.
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