Spices and sauces giant McCormick has acquired an Italian flavourings business in a €120m (£102m) cash deal to expand its presence in Europe after walking away from its pursuit of Premier Foods earlier this year.
Enrico Giotti manufactures flavourings for food and drink companies, as well as herbal extracts, and concentrated juices, generating annual revenues of €53m (£44.9m).
McCormick CEO Lawrence Kurzius said the deal expanded its breadth of value-added products for its industrial division in Europe, including additional expertise in flavouring health and nutrition products.
“The acquisition of Giotti is another important step in the execution of our growth strategy,” he added.
“It expands the breadth of our value-added flavour solutions in Europe with strong and innovative R&D capabilities and adds greater scale to our already substantial industrial segment business in the Europe, Middle East and Africa region.”
The deal, which was worth 12 times Giotti’s EBITDA, is expected to complete in December.
Malcolm Swift, McCormick president of global industrial and international business, added: “We anticipate strong growth driven by Giotti’s expertise in the high growth health and nutrition segment. The owners and employees of Giotti share with McCormick a great history and commitment to innovation and quality, and we look forward to working with them to achieve continued success.”
McCormick signalled its intent to grow in the UK and Europe with the failed takeover approach for Premier Foods in the early part of 2016.
Despite tabling three offers of 57p, 60p and 65p a share, the Schwartz owner was rebuffed by the Premier management in favour of a tie-up with Japanese food group Nissin. The bids were a massive premium to Premier’s share price and valued the supplier at more than £1.5bn, including debt.
Premier finally relented to shareholder pressure and allowed McCormick to examine its books in April but the US suitor finally walked away after completing the due diligence review.
McCormick has been active in the M&A market in the past two years, with deals for Italian spice maker Drogheria & Alimentari, Texas barbecue sauce maker Stubbs and Australian maker of chilled herbs Gourmet Garden.