FDBusiness.com

HJ Heinz is acquiring Foodstar, a leading manufacturer of soy sauces and fermented bean curd in China, from Transpac Industrial Holdings, a private equity firm. The acquisition will increase Heinz’s annual sales in China to about $300m and enable the group to enter the nation’s fast-growing $2b retail soy sauce market.

The purchase price consists of a cash payment at closing of $165m and an earn-out potentially payable in 2014 based on the performance of the business. The completion of the proposed acquisition is subject to regulatory approval in China.

Foodstar’s Master Weijixian light premium soy sauce is the leading brand of Weijixian soy sauce in the southern region of China. Foodstar’s Guanghe fermented bean curd, a popular flavor enhancer that is used in cooking, also holds a strong regional market position. Based in Guangzhou, Foodstar has four manufacturing sites and 2,500 employees in China. A new manufacturing facility is being constructed in Shanghai.

“The acquisition of Foodstar gives Heinz a strong growth platform in China’s huge, rapidly growing soy sauce market. Foodstar’s leading brands have strong equity with Chinese consumers and they are a natural fit with our core global capabilities in sauces and condiments,” says William Johnson, chairman, president and chief executive of Heinz. “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.”

Heinz has been in China, the world’s most populous nation, since the 1980’s, when the US-based food giant opened a factory in Guangzhou to produce Heinz infant cereal. Including China, emerging markets generated approximately 30% of Heinz’s reported sales growth and 15% of the company’s total sales in fiscal 2010. Heinz expects emerging markets to generate as much as 25% of sales by 2016.