- McCormick & Company Inc. (NYSE: MKC) recently announced that it is buying 100% of the shares of FONA International for $710 million in cash. These are the details.
McCormick & Company Inc. (NYSE: MKC) recently announced that it is buying 100% of the shares of FONA International, LLC and certain of its affiliates, a privately held company. FONA is a leading manufacturer of clean and natural flavors providing solutions for a diverse customer base across various applications for the food, beverage, and nutritional markets. The deal is based on $710 million in cash.
FONA’s annual sales are about $114 million and are expected to grow at a mid-to high-single- digit rate. Launched over 30 years ago, FONA is a leading independent manufacturer of flavors with a focus on nutritional and natural products and a well-recognized brand that McCormick plans to retain. The company is headquartered in Illinois and has approximately 220 employees with a state-of-the art manufacturing and technical innovation center.
McCormick said it believes the acquisition of FONA will drive long-term shareholder value. The company said it would broaden product offering and accelerates flavor growth, expand capabilities and technology platform, strengthen clean and natural leadership, enhance customer intimacy and partnerships, and it will be accretive to McCormick’s gross margin. Plus McCormick also expects the transaction to be neutral to adjusted earnings per share in 2021 and accretive in 2022, excluding transaction and integration costs.
By combining the portfolios and infrastructures, McCormick is going to add manufacturing capacity as well as greater scale and expects to accelerate its global flavor growth. And McCormick is augmenting its capabilities with FONA’s highly experienced research and development team and extending its technology platform with additional proprietary encapsulation methods.
“The acquisition of FONA reinforces McCormick’s global growth strategy as FONA expands the breadth of our flavor solutions segment into attractive categories, as well as extends our technology platform and strengthens our capabilities. This acquisition also accelerates the strategic migration of our portfolio to more value-added and technically insulated products and thus, is expected to be accretive to gross margin. FONA’s portfolio is highly complementary to McCormick’s and will provide our customers with an even more comprehensive product offering to meet the growing demand for clean and flavorful eating, drinking and nutrition experiences.”
“FONA is well known in the market, in part because of its strong customer engagement platform, talented employees and investments in its future, which have driven growth for both FONA and its customers. FONA will be the cornerstone for accelerating McCormick’s flavor platform in the Americas. With our passion for flavor, focus on insight-driven innovation and differentiated customer engagement, we look forward to continuing and building upon the legacy created by the Slawek family.”
“McCormick has a history of creating value through acquisitions. As we continue to build the McCormick of the future and create long-term shareholder value, we are confident this is a great strategic fit with our vision of being a leading flavor company. The employees of FONA share with McCormick a great history and commitment to core values and purpose, doing what is right while driving industry-leading financial performance, and we look forward to welcoming them to the McCormick family. Together we will achieve continued success.”
— Lawrence Kurzius, Chairman, President and Chief Executive Officer
“The Slawek family is very proud of the customers, the employee culture, and the company we have built. We are excited to see the next generation of FONA flourish as part of McCormick. We are confident McCormick will further enable FONA’s forward momentum by continuing to make investments in growth initiatives, capabilities and people. Fueled by the power of McCormick, FONA’s success will be accelerated. FONA, in turn, will be a key driver in advancing McCormick’s global flavor leadership.”
— Joseph James Slawek, Founder, CEO & Chairman of FONA International