FDBusiness.com

McCormick & Company, a global leader in flavour, has agreed to purchase 100% of Drogheria & Alimentari, a privately held company based in Italy, for a cash payment of approximately €50 million and a potential earn out payment in 2018 of up to €35 million based upon the performance of the business.

Based on the initial cash payment of approximately €50 million, the transaction multiple is expected to be approximately 9 times EBITDA (earnings before interest, tax, depreciation and amortization).

D&A is a leader in spices and seasonings in Italy. It has annual sales of about €50 million ($57 million), with 80% in Italy and 20% exported to 60 other countries. The addition of the D&A business extends McCormick’s presence in Europe, providing it with a strong foothold in Italy.

Founded in 1880, D&A has approximately 120 employees and a modern manufacturing facility located in Florence, Italy. McCormick expects to work with the current owners of the business and to grow sales of D&A products at a mid-single digit rate.

Alan Wilson, chairman and chief executive of McCormick, says: “We are pleased to expand our portfolio of leading brands around the world with the addition of Drogheria & Alimentari. As a supplier of both brand and private label products, D&A has approximately one third of the spice and seasoning category in Italy and exports its products to 60 other countries. We anticipate strong growth for these premium products, particularly in the US and key international markets where consumers are seeking unique and authentic ethnic flavours. ”

Malcolm Swift, president of McCormick Europe, Middle East and Africa (EMEA), adds: “This acquisition complements McCormick’s strong brands across EMEA and expands McCormick’s current spice and seasoning leadership in Europe with a sizable footprint in Italy. In addition, there is a strong fit between McCormick, a recognized flavour leader in the region, and Drogheria & Alimentari, which has a reputation for high quality products and professionalism.”