McCormick to acquire China’s Wuhan Asia-Pacific Condiments

US-based spice manufacturer McCormick has entered into an agreement to acquire Wuhan Asia-Pacific Condiments (WAPC), a privately held firm based in China, for CNY900m ($141.98m), as part of its plan to expand its presence in the country.

WAPC produces DaQiao and ChuShiLe brand bouillon products, and has a strong presence in the central region of China.

The company, which owns a manufacturing facility in Wuhan, has annual sales of approximately CNY730m ($115m).

WAPC’s sales have grown at an annual compound rate of 25% from 2007 to 2011 due to increasing demand, and McCormick expects the annual sales to grow by at least 10% in the future.

McCormick chairman, president and CEO Alan Wilson said the acquisition will expand the company’s broad portfolio of flavours with bouillon.

"This business is strong in central China, which fits well with McCormick’s presence in the coastal regions," Wilson added.

The deal amount is expected to be 12 times the EBITDA (earnings before interest, tax, depreciation and amortisation) of WAPC in 2012.

The transaction, which is subject to regulatory approvals, including anti-monopoly clearance, is expected to be completed by mid-2013.

The US spice manufacturer expects the acquisition to have a slightly dilutive impact on per-share earnings in 2013 due to integration and financing costs and $4m in expenses related to the closing of the deal; however, it anticipates the transaction to add to its earnings in 2014 and be fully accretive in 2015.

McCormick also noted that with the purchase of WAPC and other acquisitions completed over the past few months, it expects approximately 15% of its sales to come from emerging markets in 2013, bringing the firm closer to its goal of generating 20% of its sales from emerging markets by 2015.

The company has been eyeing global expansion – in 2011, it acquired Polish spice maker Kamis for $291m and bought an 85% stake in India-based Kohinoor Foods, which sells basmati rice.