McCormick expands in central Europe with $73.7M purchase

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McCormick & Co. Inc. yesterday said it paid $73.7 million for Holland’s leading maker of food seasonings, a move expected to boost the Baltimore County-based spice maker’s profile in Europe. McCormick, of Sparks, bought C.M. van Sillevoldt B.V., best known for selling the Silvo brand of seasonings in The Netherlands. The acquisition marks McCormick’s first entrance into central Europe. McCormick’s bought Uniqsauces, a British condiment manufacturer, in January 2003.“What we have been saying is, we’d like to fill in continental Europe where we didn’t have a big presence,” said Paul Beard, McCormick’s vice president of finance and treasurer. “It really enhances our footprint throughout continental Europe.” McCormick said Silvo, as the Dutch company is commonly called, will add 1 cent per share to its 2005 earnings and $50 million in sales. It said 2006 earnings would rise an additional 1 cent to 2 cents per share. McCormick said it will fund the purchase through cash from operations and current lines of credit.The purchase price for Silvo is about nine times the company’s yearly earnings. That’s a fair price according to most financial analysts, who credited Silvo with adding to its market share and upgrading its distribution system in recent years.“They currently have a leading share in the Netherlands,” said Ann Gurkin, an analyst with Davenport and Co. in Richmond, Va. “They’re an innovative company.” Silvo, which was founded in 1833, sells spices and seasonings under the Silvo brand name in the Netherlands and the India brand name in Belgium. It controls about 63 percent of the spice and herb market in the Netherlands and has a 30 percent share in Belgium. The company reported sales of about $48.3 million in 2003. It earns 75 percent of its revenue from spices and seasonings and 25 percent from specialty food products. About 84 percent of its sales were from the Netherlands, with Belgium accounting for most of the rest. McCormick executives said they had been eyeing Silvo since 2000, when McCormick bought its first European company, French spice-maker Ducros.“A couple of years ago, this business became our focus,” Beard said. “They have a strong recognition within the market.” Beard said he did not expect major integration expenses would result from the purchase, and that McCormick would likely allow Silvo to operate independently with little corporate interference. He said McCormick and Silvo would likely sell and promote each other’s products. McCormick controls more than 20 consumer business units overseas, including Schwartz Herbs and Spices, the top spice maker in Britain, and McCormick Foods Australia, which distributes products to New Zealand, Malaysia, Singapore and Indonesia. About 30 percent of McCormick’s sales in 2003 came from Europe and Asia.McCormick reported net income of $46.2 million (34 cents per share) in the third quarter of 2004, compared to $51.3 million (37 cents) during the comparable period last year. Sales rose from $557.6 million to $613.5 million during the same period. McCormick shares closed at $36.06 yesterday on the New York Stock Exchange, up 53 cents.