- Unilever and Hormel are believed to be the front-runners to purchase Reckitt Benckiser's food business, which includes French’s mustard and ketchup, according to The Sunday Times. The operation could fetch around $2.9 billion.
Reckitt has received several offers for the business. Binding offers are expected in the next few weeks, the paper said.
Other companies also are predicted to bid for the business including McCormick & Co and Pinnacle Foods, the Sunday Times reported, though Unilever and Hormel are likely to have the most firepower in any bidding war.
Industry insiders believe Reckitt Benckiser wants to sell its food business to help pay for its $16.6 billion acquisition of infant formula maker Mead Johnson. With executives at Reckitt focusing more on Dettol cleaner, Durex condoms and other faster-growing businesses, it's not a surprise to see the company looking to unload the food business, which is responsible for only 4% of its total revenue. With at least four companies interested in the operation, Reckitt's timing seems ideal.
The estimated $2.9 billion price tag for Reckitt's food business — which includes ketchup, yellow mustard, Frank’s Red Hot sauces and onion flavorings — would be a small purchase for some of the bigger food makers rumored to be interested. An acquisition is unlikely to significantly move the needle for manufacturers struggling with slowing growth and a shift toward fresher, less processed items, but it could act as a perfect complement to their existing line of brands.
Unilever could add it to its Hellmann's mayo line and recently acquired Sir Kensington’s brand — especially with rumors the company is splitting off its food segment. Hormel, which owns Jennie-O turkey, Applegate and other meat brands, could easily pair the condiments with these products. It could partner with grocery stores to position the products close to its meats so it's convenient for the shopper to grab and add to their cart or basket.
Recent weeks have seen big food players acquire several brands. Unilever, which is looking to sell its margarine brands, agreed in April to purchase natural and organic condiment maker Sir Kensington’s for an undisclosed amount. Dean Foods purchased juice maker Uncle Matt’s Organic last month. Campbell bought organic and natural food company Pacific Foods for $700 million earlier this month, and J.M. Smucker purchased of the Wesson oil brand from Conagra Brands for $285 million in May.
With food a sliver of Reckitt Benckiser's business and plenty of interested buyers, it's only a matter of time before French's finds a new home.