LONDON — U.S. spice maker McCormick & Company is buying the maker of French's mustard and other condiments in a $4.2 billion cash deal that it regards as a "perfect match."
The Maryland-based company fought off rival bidders to purchase the Reckitt Benckiser food business. The deal, disclosed Tuesday, will create a combined group with annual sales of around US$5 billion.
French's and Frank RedHot brands will become McCormick's No. 2 and 3 brands, respectively.
"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,
The deal is part of RB's strategy to re-focus on consumer health and hygiene products after it bought U.S. baby formula maker Mead Johnson. The company's brands include Nurofen, Woolite and Clearasil.
"This transaction marks another step towards transforming RB into a global leader in consumer health and hygiene," said Rakesh Kapoor, CEO of RB.
Reckitt's food business is headquartered in Chester, N.J. The company employs 450, including some 360 in Springfield, Missouri.
McCormick has said it wants to strip out around $50 million in cost "synergies" after the takeover, the majority of which would be achieved by 2020.
Shore Capital analyst Darren Shirley says Reckitt "is achieving a very attractive valuation for a North American food business, in our view."
Danica Kirka, The Associated Press