Hot sauce is an attractive, high-growth category for McCormick who can expand their offering in the market.
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McCormick has reached a definitive agreement to acquire 100% of the Cholula sauce company for $ 800 million with no cash or debt, the company said in a statement.
The transaction is expected to close by the end of the year and will be funded with a combination of available cash and commercial paper. Upon closing, the company incurs certain transaction costs that affect earnings per share.
“The acquisition of Cholula accelerates McCormick’s growth opportunities within our seasoning platform and adds the Cholula brand to our hot sauce portfolio,” added Lawrence E. Kurzius, President and CEO, in the document. by McCormick.
Hot sauce is an attractive, high-growth category, and cholula is outperforming that category. Cholula’s annual net sales are approximately $ 96 million and are expected to grow from mid to high single digits in a normalized environment beyond the COVID-19 pandemic.
Cholula’s portfolio of six different flavors is made in Mexico with high quality ingredients and is based on a 100 year old recipe made from a unique blend of fresh peppers and regional spices.
McCormick plans to keep the Cholula brand in its retail and foodservice channels.