Baltimore, MD -- Alan Wilson, McCormick Chairman, President and CEO speaks to the audience at the opening of the new McCormick World Of Flavors store, located in the Light Street Pavilion at Harborplace.
Baltimore, MD -- Alan Wilson, McCormick Chairman, President and CEO speaks to the audience at the opening of the new McCormick World Of Flavors store, located in the Light Street Pavilion at Harborplace. (Barbara Haddock Taylor / Baltimore Sun)

McCormick & Co. Inc. is expanding in Europe with the acquisition of top Italian spice-maker Drogheria & Alimentari for $97 million, the Sparks-based company announced Friday.

The 135-year-old, privately held D&A, which makes branded and private-label products, enjoys about a third of the spice and seasoning market in Italy and will give Hunt Valley-based McCormick a strong foothold in that country, the company said.

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D&A's sales reached about $57 million last year, with most of its business in Italy, though exports to 60 countries make up about a fifth of sales. D&A, which has a manufacturing plant in Florence and about 120 employees, marks McCormick's first acquisition in Italy.

"We anticipate strong growth for these premium products, particularly in the U.S. and key international markets where consumers are seeking unique and authentic ethnic flavors," said Alan Wilson, McCormick's chairman and CEO, in the company's announcement. "The owners and employees of D&A have built a great business."

McCormick will make an initial cash payment of about $57 million, with an additional "earn out" payment of up to $40 million in 2018 based on the Italian company's performance.

Shares of McCormick were trading at $75.84 Friday afternoon, up 55 cents, on the New York Stock Exchange.

The purchase, though relatively small for McCormick, which had $4.2 billion in sales in its last fiscal year, will likely be a good move, because D&A is a leader in its market, one analyst said. McCormick has said it is always evaluating potential acquisitions as part of its growth strategy.

Options have become more limited in the United States, where McCormick already is the nation's largest spice-maker, so markets overseas offer greater opportunities, said Brian Yarbrough, a consumer analyst for Edward Jones in St. Louis.

"These guys have a really good track record of acquisitions" that add to earnings, he said, adding that D&A "fits well within McCormick's portfolio. … International makes sense. … It's an opportune way for them to grow."

The D&A brand will complement brands that McCormick owns across Europe, the Middle East and Africa, said Malcolm Swift, McCormick's president for that region, in the announcement. McCormick expects mid-single-digit sales growth for the brand.

The addition "expands McCormick's current spice and seasoning leadership in Europe with a sizable footprint in Italy," said Swift, adding the two companies are compatible in reputation and culture.

McCormick has expanded its reach for decades through acquisitions and joint ventures both domestically and in emerging markets outside the U.S.

In 2013, McCormick completed the purchase of Chinese bouillon maker Wuhan Asia-Pacific Condiments Co. Ltd. for about $141 million, expanding in China, where it had been supplying industrial and retail customers.

Other deals over the past 15 years have included acquisitions of Lawry's from Unilever for $605 million; Kamis in Poland for $286 million; Billy Bee Honey brand of Canada for $75 million; Kitchen Basics in the U.S. for $38 million; Ducros of France; which had been Europe's largest spice business; and deals to acquire the Thai Kitchen, Simply Asia and Zatarain's brands.

McCormick now sells its grilling, baking and cooking flavorings in more than 100 countries, operates plants in 25 nations and has captured 21 percent of the global market for packaged spices and herbs. The company sells to retailers, food manufacturers and food service businesses.

McCormick expects to close the D&A acquisition in May, subject to regulatory approval. Because of the expense of closing the deal and integrating the company, McCormick expects no impact on earnings per share this year. The acquisition is expected to add to earnings in 2016, the company said.

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