McCormick concludes $800m acquisition of Cholula Hot Sauce

Spice and seasoning manufacturer McCormick has concluded the acquisition of Cholula Hot Sauce brand’s parent company from L Catterton for an $800m consideration.

First announced last month, the deal is expected to further strengthen McCormick’s condiment portfolio, with the addition of a new Mexican flavour hot sauce brand.

McCormick said that it funded the acquisition through a combination of cash on hand and commercial paper.

McCormick chairman, president and CEO Lawrence E Kurzius said: “We are very excited about the acquisition of Cholula as it reinforces our overarching focus on growth and creating long-term shareholder value.

“Cholula is a great strategic addition accelerating our condiment growth opportunities with a complimentary authentic Mexican flavour hot sauce.

“The talented employees of Cholula have built a strong foundation, and when combined with McCormick’s operational expertise and infrastructure, we plan to drive further growth of this iconic brand.”

McCormick plans to retain the Cholula brand name, as well as further expand Cholula’s brand presence and expand its distribution footprint.

Cholula will also enhance McCormick’s offering in the hot sauce category to consumers and foodservice operators.

Cholula’s sauces are available in six different flavours and claimed to be produced using ‘high-quality’ ingredients in Mexico.

McCormick anticipates that the transaction and integration costs will dilute earnings per share in fiscal years 2020 and 2021, and would not have any impact on adjusted earnings per share in both years.

Last February, McCormick announced a collaboration with information technology company IBM to use artificial intelligence (AI) for developing flavour and food products.

The company’s global workforce will make use of IBM Research AI for Product Composition to explore, learn and predict new flavour combinations from data points across the areas of sensory science, consumer preference and flavour palettes.