By Neil J Kanatt and Paolo Laudani
(Reuters) -McCormick said on Thursday it will raise its stake in its Mexico joint venture to 75% by acquiring 25% more for $750 million as the condiments maker seeks to expand further in Latin America.
McCormick, maker of Cholula hot sauce, said the deal should close early in the 2026 fiscal year and that the transaction should be accretive to adjusted earnings per share within the first year.
Shares in Grupo Herdez, the Mexican salsa seller and coffee chain operator that has shared the 50/50 joint venture with McCormick, shot up during morning trading, triggering a brief suspension on the Mexican stock exchange.
Its shares were up 25% at 8:45 a.m. local time (1445 GMT), bringing its market value up to nearly 23 billion Mexican pesos ($1.23 billion). Shares in McCormick meanwhile rose nearly 1%.
Connor Rattigan, an analyst at Consumer Edge, said McCormick’s decision was indicative of sentiment by similar firms regarding emerging markets as middle classes expand, but warned of pressures on consumer spending in the United States.
“This is likely not the end of the company’s ambitions for growth in the region,” he told Reuters.
Founded in 1947, the joint venture with Grupo Herdez, known as McCormick de Mexico, has been a dominant player in the condiments and sauces segment in Mexico, Latin America’s second-largest economy, selling a range of McCormick brand products.
The deal is subject to customary closing and regulatory conditions, McCormick said.
($1 = 18.7620 Mexican pesos)
(Reporting by Neil J Kanatt and Anshi Sancheti in Bengaluru and Paolo Laudani; Editing by Leroy Leo, Sarah Morland and Joe Bavier)
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