Reckitt leads Britain's FTSE up on food business sale

Reckitt leads Britain's FTSE up on food business sale

The FTSE 100 (INDEXFTSE:UKX) has opened higher today buoyed by the news that Reckitt Benckiser (LON:RB) has sold its food business to United States company McCormick & Co Inc. Frank's RedHot was already the top hot sauce brand in the USA and Canada, and French's was already the top mustard.

Lawrence E. Kurzius, chairman, president and CEO of McCormick, said RB Foods' focus on creating products with simple, high-quality ingredients makes it a ideal match for McCormick as it continues to capitalize on the growing consumer interest in healthy, flavorful eating.

French's Food will be sold after Reckitt's a strategic review of its business, in a bid to free up funds for its acquisition of baby food manufacturer Mead Johnson Nutrition. Shares in Reckitt Benckiser (LON:RB) have been in demand as the group inked a deal to offload its food business for $4.2 billion. The company also expects revenue synergies as a result of leveraging seasonal holiday promotions and grilling events that include other McCormick brands including Lawry's®, Grill Mates® and its global branded spices, herbs and extracts.

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Packaging company RPC was also among top mid-cap gainers, up 3.9 percent at a four-month high after its first quarter revenue came in ahead of a year ago, helped by acquisitions and favourable currency movements.

American McCormick & Co has acquired Reckitt Benckiser's food division for 4.2 billion dollars (3.6 billion euro), trumping Unilever to the purchase. Reckitt's shares are now changing hands 1.42 percent higher at 7,923.00p.

The deal would make McCormick a "one-stop shop" for condiments, spices and seasonings, Kurzius said, and would drive the company's net sales to $5 billion a year. And McCormick finally emerged as the highest bidder for the food unit on Wednesday. "French's Food is well positioned to continue on its successful growth trajectory under the food-focused ownership of McCormick", said Chief Executive Officer Rakesh Kapoor. Money gained from selling French's would go to reducing its debt following the Mead Johnson acquisition, it said.

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