McCormick & Company Buys Makers Of Famous Hot Sauce Brand ‘Cholula’ For $800 Million

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Spice maker McCormick & Company is buying hot sauce brand Cholula’s parent company for $800 million, the company said Tuesday according to a Reuters report.

McCormick is buying the hot sauce maker from the private equity firm L Catterton, according to the report. They are likely looking to take advantage of increased demand for their products as more people cook at home during the coronavirus pandemic. (RELATED: Alcohol Sales In Pennsylvania Suspended The Night Before Thanksgiving) 

Frank’s RedHot sauce and Old Bay seasoning are already owned by McCormick, which reported an 8% increase in sales as increased demand from more people cooking at home outweighed losses in sales to restaurants. Several food companies — including plant-based burger maker Beyond Meat Inc. and cereal maker Kellogg Co. — have reported similar increases in sales to supermarkets during the pandemic, according to the report.

McCormick said that Cholula’s annual net sales are about $96 million, and are expected to grow by single digits once things begin to normalize after the pandemic. The deal is most likely going to be completed by the end of 2020 and will add to the company’s adjusted earnings per share in 2021, McCormick said according to Reuters.

Analysts have expressed uncertainty about whether McCormick’s deal would pass the clearances needed to be compliant with regulations, Reuters reported, but have said Cholula is a great fit for McCormick.