London midday: Stocks pare gains but Reckitt rallies on McCormick deal

Ashley Carr
July 20, 2017

Consumer brands giant Unilever plc (UL) was rumored to have involved in a bidding war for the division, which includes French's mustard, Frank's Red Hot Sauce and Cattleman's BBQ Sauce.

"RB Foods' focus on creating products with simple, high-quality ingredients makes it a ideal match for McCormick as we continue to capitalize on the growing consumer interest in healthy, flavorful eating", said Lawrence E. Kurzius, McCormick's CEO.

Led by Chief Executive Officer Rakesh Kapoor, Reckitt said it was looking to unload its food business in April, when the Slough, England-based company described the division as "non-core".

That deal took Reckitt, whose brands include Durex condoms and Nurofen painkillers, into the baby-food market for the first time - and targeted rapid expansion in fast-growing Asian markets like China.

The deal comes after McCormick failed in their bid to buy Premier Foods past year, the owners of Mr Kipling cakes and Bisto gravy.

RedHot Sauce
GETTYFrank's Red Hot sauce is the number one brand in its market in the US and Canada

McCormick president and ceo Lawrence Kurzius said: "The acquisition of Reckitt Benckiser Foods strengthens McCormick's flavour leadership with the addition of the iconic French's and Frank's RedHot brands to our portfolio, which will become our number two and number three brands, respectively". Reckitt Benckiser said that it had initiated a strategic review of the division "where we will explore all options for this great business".

The divestment follows Reckitt's purchase of United States infant and child nutrition specialist Mead Johnson in February for $16.6-billion.

Packaging company RPC was also among top mid-cap gainers, up 3.9 percent at a four-month high after its first quarter revenue came in ahead of past year, helped by acquisitions and favourable currency movements. McCormick plans to fund the deal with a combination of equity and debt, and said it has obtained committed bridge financing.

The FTSE 100 gained 0.1 percent, with household goods and food sectors boosting the index while miners weighed. Reckitt's shares are now changing hands 1.42 percent higher at 7,923.00p.

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