LONDON (AP) — U.S. spice maker McCormick & Company has bought Reckitt Benckiser's food business in a $4.2 billion cash deal that it regards as a "perfect match."
The Sparks, Maryland-based company fought off rival bidders to purchase the business that makes French's mustard and Frank's RedHot brands. The deal, disclosed Tuesday, will create a combined group with annual sales of around $5 billion.
French's and Frank RedHot brands will become McCormick's number two and number three 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, flavorful eating," said Lawrence E. Kurzius, McCormick's CEO.
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, New Jersey. 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."