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.
-
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 ... ?
= new reply since forum marked as read
