McCormick & Company, Incorporated (NYSE:MKC) has announced that it will be acquiring the food division of Reckitt Benckiser Group Plc-ADR (OTCMKTS:RBGLY).

The deal will have McCormick paying $4.2 billion for the food division of Reckitt Benckiser. This will bring several well-known brands, such as French’s Mustard and Frank’s RedHot Hot Sauce, under its control. The company will be using debt and equity to finance the transaction.

McCormick says that it will bring the food division of Reckitt Benckiser into its Consumer and Industrial segments. However, it will continue to sell products under the brand names of French’s, Frank’s RedHot and Cattlemen’s.

McCormick expects that the deal will bring it combined pro forma 2017 annual net sales of $5 billion with significant margin accretion. It also notes that it will make it a leader in the U.S. Condiments category, as well as in the Hot Sauce Category in the U.S. and Canada.

McCormick is expecting to close the deal with Reckitt Benckiser during the third or fourth quarter of its fiscal 2017. It will need to go through customary closing conditions, including getting approval from regulators, before it can be completed.

Once the deal is complete, McCormick says that it will increase its leverage ratio. It plans to maintain a investment grade credit rating and return to its current credit profile in the long term. To achieve this goal, it will continue to maintain its dividend policy, reduce its share repurchase program and deleverage its balance sheet.

MKC stock was down 5% and RBGLY stock was up 1% as of Wednesday afternoon. RBGLY  stock is also up 23% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.