NYSE-listed McCormick & Company, Inc has acquired a 26% stake for approximately $35 million in Kerala-based Eastern Condiments Private Limited, valuing the company at around $135 million. The leading spice and seasoning business had annual sales of $67 million in the year
ended March 2010. The deal is expected to be closed in the fourth quarter of 2010 subject to regulatory approval.
The deal would give an exit to private equity firm New Vernon, which acquired a 13-14% stake in the firm for $10 million in 2006. Business Standard had reported earlier today that New Vernon along with the promoter family may sell a 26% stake.
Eastern is a leading brand of spices, seasonings and other related food products in India and the Middle East. The partnership is expected to lead to continued double-digit sales growth and further profitability for the Eastern brand, said McCormick in a release.
M.E. Meeran, Chairman of Eastern, stated, "We are pleased to partner with McCormick and expect to benefit from their expertise in global sourcing, manufacturing, product innovation and brand marketing. Their global presence will accelerate our efforts to bring authentic products to Indian consumers in international locations as well as introduce other consumers to Indian cuisine."
Alan D. Wilson, Chairman, President & CEO of McCormick, stated, "This partnership is an important opportunity for McCormick to participate in the rapid growth of the India food market as consumers seek high-quality, more convenient packaged foods. The management of
Eastern has built a strong brand image and utilizes an effective distribution system. They are rapidly expanding their geographic reach, as well as developing innovative and value-added new products."
Eastern has operated profitably in each of the last 10 years and with the average annual growth rate exceeding 25% for the past three years. The Eastern brand's share of the packaged spice category is approximately 50% in the southern state of Kerala where products are delivered by direct distribution. Eastern's products are exported to 15 other countries.
This will be McCormick's second joint venture in India. Since 1994 McCormick has had a 50% interest in India-based AVT McCormick Ingredients Private Limited which claims to have a leadership position producing cleaned, steam sterilized, ready to use spice ingredients for the global market.