Food products maker HJ Heinz Co. (HNZ) announced Monday that it signed an agreement to acquire Chinese soy sauce company, Foodstar for $165 million in cash, and a potential earn-out payment in 2014. With the acquisition, Heinz expects sales from China to reach $300 million.As per the agreement, the earn-out, potentially payable in 2014, would be based on the performance of the business. The completion of the acquisition is subject to regulatory approval in China and other customary conditions.
Foodstar is a part of private equity holding company Transpac Industrial Holdings Ltd. and its brands include Master Weijixian light premium soy sauce and Guanghe fermented bean curd. Based in Guangzhou, Foodstar has four manufacturing units and a fifth under construction.
Heinz expects Foodstar’s brands to give it a strong growth platform as soy sauce market in China is worth $2 billion with annual growth rate of 7% to 8%. According to the company, emerging markets such as India, Indonesia, Russia, Latin America and the Middle East generated approximately 30% of its reported sales growth and 15% of total sales in fiscal 2010. Heinz expects emerging markets to generate as much as 25% of sales by 2016.William Johnson, chief executive officer said “The acquisition is another important step in our strategy to accelerate growth in dynamic Emerging Markets like China, where Heinz is already well positioned with our growing infant nutrition business and Long Fong, a leading brand of frozen dim sum.”
HNZ is currently trading on the NYSE at $46.16, down $0.09 or 0.19%.
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