Durex owner Reckitt Benckiser sells sauces business for $4.2bn

Kelly Massey
July 20, 2017

Commenting on the sale, Reckitt Benckiser CEO Rakesh Kapoor said: "Following the acquisition of Mead Johnson Nutrition, this transaction marks another step toward 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".

Nestle SA, the world's largest food company, is also shaking up its portfolio.

The deal is subject to customary purchase price adjustments, and regulatory approval Reckitt said.

According to reports, the bid is said to aid Reckitt in paying off its debt after the Mead Johnson deal in June.

An investor in Abercrombie & Fitch Co called on the US teen apparel retailer to buy back its shares, following the company's failed attempt to sell itself. The two businesses combined will have approximately $5 billion in sales.

RBC Capital Markets analysts said it "feels to us like a very high price for a USA oriented ambient food business", Reuters reported.

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Reckitt's shares were up 1.4 per cent to £79.21 this afternoon. Inc. has announced it will buy French's Mustard for more than $4 billion.

"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. Hormel Foods (HRL) and Birds Eyes Pinnacle Foods (PF) were also said to be bidders in a Sunday Times article on July 16. The hot sauce category will continue to see robust growth, with opportunities for expansion, McCormick said in the statement. We think the strategic rationale of the tie-up, the possibility of which we'd written about in April, is clear: It affords McCormick the opportunity to leverage its leading presence in the spices, seasoning, and food flavoring aisle with high-growth, high-margin condiment brands, complementing its 2015 purchase of USA barbecue sauce maker Stubb's.

McCormick dates to 1889, when founder Willoughby McCormick began selling flavors and extracts door to door.

Credit Suisse Group is serving as the financial adviser to McCormick on the RB Foods transaction, and Cleary Gottlieb Steen & Hamilton is legal counsel.

Incidentally, McCormick might have felt it could afford the luxury of a bigger price today having dodged a bullet with Premier.

Other reports by Guamnewswatch

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