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Wed Jul 19, 2017, 05:36 AM

Reckitt cuts the mustard with $4.2 billion food business sale

Source: Reuters

(Reuters) - U.S. spices maker McCormick & Co Inc (MKC.N) has agreed to buy Reckitt Benckiser Group's (RB.L) food business for a higher-than-expected $4.2 billion to give it a wider variety of seasonings and sauces.

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At $4.2 billion, the price represents a multiple of more than 7 times the annual sales from the business and 20 times its earnings before interest, tax, depreciation and amortization.

That is much higher than the long-term average of major deals in the sector, which Bernstein analysts say is 3.3 times sales and 16.2 times EBITDA.

Sources had previously estimated that the business, which attracted interest from several other U.S. players, would fetch more than $3 billion.

Read more: http://www.reuters.com/article/us-reckitt-food-mccormick-idUSKBN1A32GQ



Anyone notice how spices and vitamins, the latter of which is not part of this deal, have skyrocketed over
the last 15 or 25 years?

15 years ago, or during the recession, discount stores were loaded with off-brand spices at 99 cents. In the
1990s mail-order vitamin catalogs practically begged consumers to purchase with discounts, free shipping.
Now consolidation has concentrated ownership in fewer companies, sometimes private equity, and not only
are prices up, but the product is shrinking. 99 cents, if you can find them, is 1.5 to 2 ounces now. I can
recall 6 or even 8 ounces of dill, mustard, cinnamon, turmeric at those prices.

We are so cooked. In this deal we have more concentration of product lines. I'm sure it's not a monopoly, but
what major spice brands are there? McCormick, Durkee ... ?

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Reply Reckitt cuts the mustard with $4.2 billion food business sale (Original post)
bucolic_frolic Jul 2017 OP
gay texan Jul 2017 #1
dembotoz Jul 2017 #2
DK504 Jul 2017 #3
bucolic_frolic Jul 2017 #4

Response to bucolic_frolic (Original post)

Wed Jul 19, 2017, 07:28 AM

1. not surprised to hear this

Reckitt has made some truly stupid decisions in the past, costing a lot of jobs in the US. You wonder how a company like that stays in business.

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Response to bucolic_frolic (Original post)

Wed Jul 19, 2017, 09:46 AM

2. well i will need something to make my future cans of cat food tasty

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Response to bucolic_frolic (Original post)

Wed Jul 19, 2017, 10:45 AM

3. These companies are allowed to do whatever they want

it's not like they have an agency overseeing food companies businesses.

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Response to DK504 (Reply #3)

Wed Jul 19, 2017, 11:11 AM

4. All public companies have government oversight as part of their lives

SEC, shareholder's rights, truth in labeling, FDA inspections, state regulations (PA. Dept. Agriculture is stamped on just about everything to do with food), antitrust regulations, FASB, public financial statements, stock exchange regulations.

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