"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 Lawrence E. Kurzius, chairman, president and CEO. "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. The addition of Frank's RedHot Hot Sauce, the clear consumer favorite in an attractive and high-growth category, French's Mustard and the other beloved products enables McCormick to become a one-stop shop for condiment, spice and seasoning needs, providing our customers and consumers with an even more diverse and complete flavor product offering. RB Foods' track record of creating market-leading products and its dedicated state-of-the-art manufacturing facility are a strong complementary fit that we expect will strengthen McCormick's business opportunities as we expand our presence in condiments, a core category for the company in the U.S. and internationally."
Rakesh Kapoor, CEO of RB, 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, ensuring we continue to deliver for shareholders and give people innovative solutions for healthier lives and happier homes.”
“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,” he added. “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.”
RB Foods is a leader in the growing U.S. Condiments market, with a portfolio of iconic brands and a loyal consumer following. Frank's RedHot Hot Sauce, French's Mustard, French's Crispy Vegetables and Cattlemen's BBQ Sauce have all captured attractive market share positions in their respective categories. Frank's RedHot has a passionate consumer following and is the number one brand in its market in the U.S and Canada, with growth outpacing the category. French's Mustard is also number one in its category in the U.S. and Canada.
For McCormick, Mr. Kurzius said, the transaction reinforces its focus on growth, “reflecting McCormick's commitment to making every meal and moment better and driving significant shareholder value. We have great respect for RB Foods and the strong business its employees have built. McCormick will be able to grow these brands in new and unique ways through our proven track record of insight-driven innovation and the ability to leverage our global footprint. We are confident McCormick is the perfect home for RB Foods' popular brands and employees."
According to Lianne van den Bos, senior food analyst at Euromonitor International, 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. “The strong synergies between the brands offer plenty of opportunities for McCormick to bring operating costs down and increase profitability, a key focus area for many multinationals this year especially within staple foods. Nestlé and Unilever are two recent examples of falling victim to increased pressures from the investment community to make profit margins the number one priority. That said, a $4.2 billion price tag seems a hefty premium to pay for Reckitt’s food arm that generated $338 million in sauces dressings and condiments in 2016.”