Ingredients company McCormick & Company has bought L Catterton, the parent company of Chulula Hot Sauce, for US$800 million ($1 billion) in cash.
The definitive agreement to acquire 100 per cent of the parent company is on a cash free, debt free basis, subject to customary working capital adjustments. The transaction is expected to be completed by the end of the calendar year and will be financed with a combination of cash on hand and commercial paper.
McCormick president and CEO Lawrence Kurzius said the acquisition would accelerate McCormick's growth in the condiment sector and broaden its hot sauce portfolio.
“Hot sauce is an attractive, high-growth category and, as an iconic premium brand, Cholula is outpacing category growth. As McCormick continues to capitalise on the growing consumer interest in healthy and flavourful eating, Cholula, a brand known for authentic bold and spicy Mexican flavours, is a strong complement to our portfolio.”
Mr. Kurzius said: “McCormick has a history of creating value through acquisitions. We have a proven track record for achieving our plans and accelerating the performance of acquired brands. We plan to grow Cholula by optimising category management and brand marketing, while also expanding channel penetration, making McCormick the perfect home for the Cholula brand.
“As we remain focused on growth and creating long-term shareholder value, we are confident Cholula is a great strategic addition to the McCormick portfolio."
Cholula CEO Maura Mottolese said: “In the last 19 months, with the support, resources, and operational expertise of the L Catterton team, we established Cholula as a high-performing standalone business, vastly improved our commercial execution efforts, and pivoted our foodservice strategy to position Cholula for long-term growth and success.
“With McCormick’s extensive experience and unique insight into the hot sauce category and unmatched global flavour leadership, we look forward to capitalising on new opportunities and reaching even greater heights together.”
Cholula’s annual net sales are approximately $96 million and are expected to grow mid-to-high single digits in a normalised environment beyond the COVID-19 pandemic. Cholula’s portfolio of six distinctive flavours is proudly made in Mexico using high-quality ingredients and is based on a 100-year old recipe comprised of a unique blend of fresh peppers and regional spices.
McCormick plans to retain the Cholula brand name in both the retail and foodservice channels.
