Under an agreement signed between the two, McCormick will pay US$115m for an 85 per cent share of the joint venture, said Joyce Brooks, vice president of investor relations at McCormick.
“The transaction also includes the transfer of certain trademarks and non-compete undertakings from Kohinoor Foods Limited and the family behind the company,” said Brooks.
McCormick will own Kohinoor trademarks for the Indian geography under the agreement, according to Brooks, who added that a mutually agreed non-compete agreement will be put in force once the transaction is closed by the end of 2011.
“The joint venture will own the facility which produces food products other than basmati rice, while a contract manufacturing agreement has been negotiated with the partner for the procurement and production of basmati rice products,” said Brooks.
Brooks added that production is ongoing at the facility that produces non-basmati products and that it will simply transfer to the joint venture upon closing of the transaction.
Established in 1976, Kohinoor Foods is currently engaged in the manufacture and sale of food products in India and overseas markets, including the US, Canada, the United Kingdom, France, and other middle-eastern countries.
The company offers basmati rice, pulses and lentils, wheat flour, spices, frozen food, ready-to-eat food, cook-in sauces and cooking pastes, ready made gravies, and seasonings.
Brooks also said that the spice maker chose Kohinoor Foods as a partner given that is has developed into a fast-growing, profitable maker of branded basmati rice with an extensive network of 350,000 retailers in India.
“In addition, Kohinoor has expanded beyond rice with the introduction of ready-to-eat products, cook-in sauces and other products that offer consumers in India high quality and great flavours,” she added.
This, according to Brooks, provides McCormick with a ready platform with which it will be able to develop and launch new products, penetrate under-served markets and expand in the foodservice channel in India.
McCormick is currently engaged in the manufacturing, marketing and distribution of spices, seasonings, specialty foods and flavourings to retail outlets, food manufacturers and food service businesses.
The Kohinoor partnership is McCormick’s third joint venture in India. In 1994, it formed a joint venture with AV Thomas Group in India to clean and process spices before use in other McCormick facilities and for sale to its customers.
Then in 2010, it acquired a 26 per cent stake in Eastern Condiments Pvt Ltd, maker and distributor of spices, seasonings and other related food products in India and the Middle East.