* McCormick ( MKC ) in talks with Unilever ( UL ) for around $30 billion

food business

* McCormick's ( MKC ) past acquisitions include Frank's RedHot,

French's mustard, and Cholula

* Analysts highlight challenges in executing large-scale

acquisitions

By Yadarisa Shabong, Neil J Kanatt and Savyata Mishra

March 20 (Reuters) - Spice maker McCormick ( MKC ) has built a

reputation as a savvy acquirer in the past decade, turning

brands like Frank's RedHot and French's mustard into growth

drivers that now account for a sizeable chunk of its $6.8

billion in annual sales, analysts say.

McCormick's ( MKC ) next trick would be its most ambitious yet.

The company is in talks with Unilever ( UL ) about a potential

deal for the British company's food business, valued by Barclays

analysts at more than $30 billion.

That includes Hellmann's mayonnaise and Knorr bouillon -

multi-billion-dollar brands that would significantly expand

McCormick's ( MKC ) global presence in condiments and cooking aids.

McCormick ( MKC ) purchased Frank's and French's in a $4.2 billion

deal for Reckitt's North American food business in 2017.

Cholula hot sauce followed in 2020 in an $800 million

acquisition from private equity firm L Catterton. The company

holds leading brands in spices, seasoning, hot sauce and

mustard.

EXECUTION IS KEY

McCormick ( MKC ), whose $14.5 billion market capitalisation is far

smaller than Unilever's ( UL ) foods business, will first have to

finance the deal. The two companies gave no clues on how any

deal might be structured, confirming ongoing talks but providing

no financial details.

But acquiring brands to grow its own portfolio is a tried

and tested strategy, and a deal to combine with Unilever's ( UL ) food

business, which also includes historic ​British brands such as

Colman's and Marmite, would make strategic sense, analysts say.

"(McCormick ( MKC )) has demonstrated an interest in expanding its

emerging market exposure and extending its category perimeter.

Indeed, it has often used M&A to accomplish these priorities,"

said BNP Paribas analyst Max Gumport.

Chris Beckett, consumer staples analyst at Quilter Cheviot,

cited French's mustard and Frank's RedHot Sauce as examples of

McCormick's ( MKC ) success, adding, "they've done well with the brands

that they've acquired".

The question now is whether McCormick ( MKC ) can repeat those

successes with more global brands.

"I think it's possible, but not as easy as before," said

Natalia Glushchenko, director of revenue growth management at

Vibrant Ingredients, which works with consumer packaged goods

players including McCormick ( MKC ). "The market is tougher now: costs

are more volatile, consumers are more price-sensitive, and

retailers are pushing harder on margins. Execution will matter a

lot more."