HUNT VALLEY, Md. — McCormick & Company Inc. has entered into a definitive agreement to acquire 100 per cent of L Catterton, the parent company of Cholula, for $800 million on a cash free, debt free basis, subject to customary working capital adjustments.
“The acquisition of Cholula accelerates McCormick’s growth opportunities within our condiment platform and broadens our portfolio in the hot-sauce category with the addition of the Cholula brand,” says Lawrence E. Kurzius, Chairman, president and Chief Executive Officer. “Hot sauce is an attractive, high-growth category and, as an iconic premium brand, Cholula is outpacing category growth. As McCormick continues to capitalize on the growing consumer interest in healthy and flavourful eating, Cholula is a strong complement to our portfolio providing consumers and foodservice operators with an even more diverse product offering that we expect will strengthen our growth opportunities.”
“In the last 19 months, with the support, resources and operational expertise of the L Catterton team, we established Cholula as a high-performing standalone business, vastly improved our commercial execution efforts and pivoted our foodservice strategy to position Cholula for long-term growth and success,” says Maura Mottolese, Chief Executive Officer of Cholula. “With McCormick’s extensive experience and unique insight into the hot-sauce category and unmatched global flavour leadership, we look forward to capitalizing on new opportunities and reaching even greater heights together.”
Cholula’s annual net sales are approximately $96 million and are expected to grow mid-to-high single digits in a normalized environment beyond the COVID-19 pandemic. Cholula’s portfolio of six flavours is made in Mexico using high-quality ingredients and is based on a 100-year old recipe comprised of a unique blend of fresh peppers and regional spices. McCormick plans to retain the Cholula brand name in both the retail and foodservice channels.
The transaction is expected to be completed by the end of the calendar year and will be financed with a combination of cash on hand and commercial paper. Upon closing, the company will incur certain transaction costs that will impact earnings per share. The transaction is subject to customary closing conditions.