McCormick & Company Inc. (NYSE: MKC) reported signing of a definitive agreement to acquire the parent company of Cholula Hot Sauce for USD 800 Million in cash. Cholula’s annual net sales are USD 96 Million but is anticipated to grow to mid to high single digits in a normal environment beyond the coronavirus pandemic. “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,” said 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 flavorful eating, Cholula, a brand known for authentic bold and spicy Mexican flavors, 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.”
Mr. Kurzius continued, “McCormick has a history of creating value through acquisitions. We have a proven track record for achieving our plans and accelerating the performance of acquired brands. We plan to grow Cholula by optimizing category management and brand marketing, while also expanding channel penetration, making McCormick the perfect home for the Cholula brand. As we remain focused on growth and creating long-term shareholder value, we are confident Cholula is a great strategic addition to the McCormick portfolio.”
“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,” said Maura Mottolese, Chief Executive Officer of Cholula. “With McCormick’s extensive experience and unique insight into the hot sauce category and unmatched global flavor leadership, we look forward to capitalizing on new opportunities and reaching even greater heights together.”
McCormick will elevate Cholula’s brand awareness as it increases the availability of its products and extend it into new formats to drive household penetration. The transaction is expected to complete by the end of the calendar year and will be financed by a combination of cash and commercial paper.