Heinz Enters Agreement to Acquire Foodstar to Accelerate its Growth in China
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.
22 Jun 2010 --- H.J. Heinz Company announced that it has signed an agreement to acquire Foodstar, a leading manufacturer of soy sauces and fermented bean curd in China, from Transpac Industrial Holdings Ltd., a private equity holding company, and various Transpac Funds. The acquisition of Foodstar would increase Heinz’s annual sales in China to about $300 million and enable Heinz to enter the nation’s fast-growing $2 billion retail soy sauce market.
The purchase price consists of a cash payment at closing of $165 million 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 and other customary conditions.
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,” said Heinz Chairman, President and CEO William R. Johnson. “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.”
Mr. Johnson added: “We expect to drive the growth of Foodstar’s brands by leveraging our expertise in innovation, marketing, sales and distribution in China.”
Through the acquisition, Heinz is entering a retail soy sauce market in China that is growing at an annual rate of 7% to 8%. The Weijixian soy sauce segment, where Foodstar’s Master brand is a strong competitor, has grown at a much higher rate than the total soy sauce category.
Heinz already produces ABC, a leading brand of soy sauces in Indonesia, another key Emerging Market for the Company, and it markets soy sauces such as Amoy in other markets around the world.
Heinz has been in China, the world’s most populous nation, since the 1980’s, when the Company 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, which ended April 28. Heinz expects Emerging Markets to generate as much as 25 percent of sales by 2016.
