McCormick Sells Real Estate Division for $550 Million
BALTIMORE (AP) _ McCormick & Co. Inc. has agreed to sell its real estate subsidiary for about $550 million to a joint venture of the Rouse Co. and the Teachers Insurance and Annuity Association.
Clifford F. Ransom 2nd, senior vice president of the institutional research department of the Baltimore-based brokerage firm Baker Watts & Co., said Monday the sale of McCormick Properties Inc. would give the spice giant a pretax gain of more than $200 million.
McCormick is the world’s largest spice manufacturer, with 1987 sales of $1.1 billion.
The deal will substantially boost McCormick’s stock value while allowing it ″to focus on the work that is closest to its core business - the food, spice, flavorings, extracts business,″ Ransom said.
James J. Harrison Jr., McCormick’s vice president and chief financial officer, said the company has no firm plans for what it will do with the cash.
″Our highest priority is an acquisition or acquisitions in our core businesses, including the consumer products area, and also in the food service area,″ he said. ″Other uses we’ve thought about include the retirement of debt and stock repurchases.″
The purchase gives Rouse, a real estate company, an opportunity to diversify into office, industrial, and research and development properties in the Baltimore-Washington corridor.
The sale involves all McCormick’s real estate holdings, which amount to about 9 million square feet of office space, said Larry Lichtenauer, McCormick spokesman.
The transaction is expected to be completed by the end of the year.
Mathias J. DeVito, Rouse’s chairman and chief executive officer, said the deal was being financed by the Teachers and Insurance Annuity Association, a large pension fund plan for college and high school teachers that has financed or participated in joint ventures with other Rouse projects.