SPARKS, Md. — McCormick & Company, a global manufacturer, marketer and distributor of spices, seasoning mixes and condiments, has acquired Wuhan Asia-Pacific Condiments Co. WAPC manufactures and markets the DaQiao and ChuShiLe brand of bouillon products, which have a leading position in the central region of China.
These products complement McCormick's current portfolio of flavor products in China that include spices, seasoning blends and sauces. With its strong presence in central China, WAPC also complements McCormick's presence in the coastal regions.
Annual sales of WAPC's business are approximately $122 million U.S. In the past five years, sales of WAPC have increased at a compound annual growth rate of approximately 25%, and McCormick anticipates continued annual sales growth of at least 10%. The purchase price for this business was $147 million U.S., subject to normal purchase price adjustments. McCormick funded this acquisition with cash and debt.
McCormick expects the acquisition to increase earnings per share in 2014 and be fully accretive in 2015, once integration activity is completed. In 2013, the company expects to record $4 million of fees and other costs related to the completion of the transaction, as well as integration and financing costs. These costs are expected to more than offset operating income from the WAPC business and have a slightly dilutive impact on 2013 earnings per share. The company expects operating income margin from the business to be approximately 10%, when transaction, integration and financing costs are excluded.
McCormick's growth strategy includes expansion in emerging markets where consumers have an increasing interest in flavors and branded food products. The company first entered China more than 20 years ago to supply products to industrial customers. This was followed by the successful launch of consumer products. Across both the consumer and industrial business, the company operates profitably in China and has grown sales more than 50% in the past five years.
McCormick & Company products are available at retail outlets, food manufacturers and foodservice businesses.