McCormick to buy sauce firm in Britain for $19.5 million

Spice firm raises capacity for liquid goods in Europe

January 10, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

Putting into practice a plan to grow through acquisitions, McCormick & Co. announced yesterday that it is buying the British condiment maker UNIQsauces for $19.5 million in cash.

"Our overall mission is to expand our company in the flavor business," said Robert J. Lawless, McCormick's chairman, president and chief executive.

"We have been very public that the performance of the company over the past four years has given us a favorable cash situation, and we are able to follow an acquisition strategy."

Lawless said the deal would give the Sparks-based spice company "a wet manufacturing facility to complement our current manufacturing facilities in Europe," which mostly produce dry spices.

UNIQsauces, with two factories and 350 workers in Littleborough, Lancashire, makes sauces, salad dressings and condiments for retail sale and for food service companies that sell to institutions and restaurants.

R. Bentley Offutt, an analyst with Offutt Securities in Hunt Valley, said that McCormick's acquisition of French spice-maker Ducros in 2000 - at $394 million, the largest acquisition in the company's history - had given McCormick a strong position in the consumer market in Europe, but that the company had been looking for more food service opportunities there.

Currently, according to Offutt, about 85 percent of McCormick's business in Europe is retail, compared with 30 percent to 40 percent in the United States.

Other than a small packaging division - which Lawless said is "under intense scrutiny" at McCormick because it is "not core" to the business - McCormick gets the balance of its U.S. sales in food service and "industrial" food, in which it sells flavorings to manufacturers.

Offutt said the acquisition would create "cross-selling" opportunities with Ducros, and that McCormick had paid "a very reasonable price."

UNIQsauces had sales for the year that ended March 31, 2002, of $57 million and profits of $800,000.

UNIQsauces is being sold by Uniq PLC, a convenience food operation. Uniq, looking to pay down debt, also sold its yogurt division, St. Ivel, in June.

In a statement yesterday, Uniq said: "The sale is in line with Uniq's strategy to focus more strongly on the growth markets within the European chilled convenience food sector."

McCormick said it expected the deal to be neutral to earnings in 2003, but to add to earnings per share in future years.

UNIQsauces has the license for Newman's Own products in Europe. It also sells retail products under the Hammond brand and with private labels.

Lawless said the deal was "very small for us, but it's critical." The company, he continued, hopes to use the UNIQsauces manufacturing capacity to add other "wet" products, and to serve as a base for selling condiments in the food service segment.

Consolidation in the food industry over the past few years, Lawless said, has seen "very large companies buying large companies," then selling off "pieces that don't fit their strategy."

He added, "Any brands that are divested are of interest to us."

McCormick shares closed yesterday at $22.93, up 17 cents for the day.

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