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McCormick Acquires Italian Flavor Maker Enrico Giotti SpA

GIS MKC INGR LANC

Trades from $3

McCormick & Co., Inc. (MKC - Free Report) recently announced its acquisition of 100% of the shares of Italy-based Enrico Giotti SpA (Giotti) for approximately €120 million ($127 million) cash. Shares of the company increased 0.81% yesterday following the news.

Located in Florence, Italy, Giotti is popular for its innovative beverage, sweet, savory and dairy flavor applications. It generates net annual sales of around €53 million ($56 million).

The acquisition of Giotti will complement McCormick’s business, which involves supplying flavors to packaged food companies and multi-national restaurants. Further, it will help boost McCormick's industrial segment with value-added products, including additional expertise in flavoring health and nutrition products. Further, this acquisition will strengthen the industrial segment business in the Europe, Middle East and Africa region.

McCormick expects to complete this transaction in Dec 2016.

MCCORMICK & CO Price and Consensus

 

MCCORMICK & CO Price and Consensus | MCCORMICK & CO Quote

McCormick has been strategically increasing its presence through acquisitions in order to expand its spices and seasonings portfolio. In the emerging markets too, the company has extended its reach where it has little or no distribution.

In Apr 2016, the company acquired Australia-based Botanical Food Company, which is the seller of the Gourmet Garden brand of packaged herbs. The acquisition of Gourmet Garden maker complements McCormick's existing branded herb portfolio with the addition of chilled convenient herbs. McCormick plans to expand global distribution and increase brand investment in order to boost sales of the Gourmet Garden brand.

In 2015, the company acquired One World Foods, the seller of Stubb's barbeque sauces in August, after Drogheria & Alimentari in May and Brand Aromatics in March. These three acquisitions boosted 2015 sales by 1%.

In another development, McCormick’s board raised its quarterly dividend by 9.3% to 47 cents per share, which will be payable on Jan 17, 2017 to shareholders of record as of Dec 30, 2016.  This marks the 31st consecutive year in which the company has increased its quarterly dividend. 

Further, McCormick, known for its spices and Lawry's seasonings, regularly enhances its products through innovation in order to remain competitive and tap the rising demand for new flavors, spices and herbs, which are fast replacing demand for sugar, salt and fat.

Zacks Rank

McCormick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the food industry include General Mills, Inc. (GIS - Free Report) , Ingredion, Inc. (INGR - Free Report) and Lancaster Colony Corporation (LANC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Mills has an average positive earnings surprise of 4.37% in the trailing four quarters. It also has a long-term earnings growth rate of 8.18%.

While Ingredion has a long-term earnings growth rate of 11.00%, Lancaster Colony has a growth rate of 3.00%.

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