McCormick & Co. announced Monday that it had signed an agreement to buy a popular bouillon maker in China, expanding its growing presence there.
Sparks-based McCormick has agreed to acquire Wuhan Asia-Pacific Condiments Co. Ltd. for about $141 million, according to a statement released by the company. Completion of the agreement, which is subject to regulatory approval, is expected in mid-2013, the spice company said.
The acquisition fits into McCormick's continued push to expand in overseas markets such as China, said Alan Wilson, its chairman, president and CEO, in the statement.
"McCormick first entered China more than 20 years ago to provide a local source of supply to industrial customers," Wilson said. "From this foundation we launched the McCormick brand of flavor products for consumers. Today, McCormick is one of the leading brands of spices and seasonings, with particularly strong category share in the coastal regions."
The well-known bouillon brands that Wuhan Asia-Pacific Condiments, or WAPC, makes and markets are popular in the central region of China, McCormick said in its statement. Founded in 1998, the Chinese company has annual sales of roughly $115 million and it employs about 900 people, primarily at a manufacturing facility in Wuhan, China, it said. WAPC sells through a network of distributors that serves traditional markets as well as modern grocery stores.
McCormick's consumer and industrial businesses "operate profitably in China and have grown sales at a 16 percent compound rate for the past five years," Wilson said.
"We expect approximately 15 percent of 2013 sales to come from emerging markets, a significant increase from 10 percent in 2011," Wilson said in the statement. "We are well on our way toward achieving our 2015 goal to have 20 percent of sales in emerging markets."
In its 2011 fiscal year, which ended Nov. 30, the spice company reported that its annual sales grew 10.8 percent to $3.7 billion.
On Monday, McCormick's stock rose 25 cents to $60.37 a share in New York Stock Exchange trading.
"McCormick is strategically increasing its presence in emerging markets to meet the growing demand for spices in these fast growing nations," Zacks Equity Research said in a report issued Monday.
Zacks maintained a neutral rating on McCormick's stock, citing the increasing costs of raw materials as well as the challenges of operating overseas, which range from currency fluctuations to political risks.
At McCormick's annual meeting in March, Wilson said the company would continue to seek to overseas acquisitions to continue fueling its growth.
In 2011, the company bought Kamis SA, a privately held Polish company that makes spices, seasonings and mustards, for $291 million and acquired an 85 percent share in Kohinoor Foods Ltd., an Indian company that sells basmati rice and other foods.
The WAPC deal further extends McCormick's geographic and flavor reach in China.
"In WAPC's top markets, more than half of consumers use chicken bouillon each day at every meal to enhance the flavor of their food," Wilson said in the statement. "This business is strong in central China, which fits well with McCormick's presence in the coastal regions."Copyright © 2015, The Baltimore Sun