Heinz buys Lea & Perrins, HP Foods for $852 million

PARIS (AP) _ H.J. Heinz Co., the United States' largest ketchup maker, has agreed to buy the HP Foods and Lea & Perrins sauce divisions from France's Groupe Danone for $852 million, the company

Monday, June 20th 2005, 10:04 am

By: News On 6

PARIS (AP) _ H.J. Heinz Co., the United States' largest ketchup maker, has agreed to buy the HP Foods and Lea & Perrins sauce divisions from France's Groupe Danone for $852 million, the company said Monday.

The brands, which are marketed primarily in Britain, the United States and Canada, accounted for close to $292 million in revenue last year, Danone said.

Danone said it will also grant Pittsburgh-based Heinz a license to manufacture its Amoy brand of sauces in Europe as part of the deal.

The sale adds condiments including Lea & Perrins Worcestershire sauce, HP Sauce, Amoy soy sauce and Rajah spices to Heinz's famous 57 original varieties. Besides controlling 60 percent of the U.S. ketchup market, Heinz makes brands including Ore-Ida frozen potatoes and Weight Watchers foods.

The transaction brings Danone closer to its objective of refocusing activity on three main businesses: fresh dairy products; drinks and bottled waters; and biscuits. Danone products include Evian and Volvic bottled water, Dannon yogurts and LU cookies.

Danone said it still plans to sell Amoy, its Asian sauces arm, but decided it would get a better deal for shareholders by selling it separately.

``The sale of the sauce division tolls the bells for the Amoy business in Asia,'' Chief Financial Officer Emmanuel Faber said in a conference call. ``It should also be disposed of as a noncore business for us.''

Amoy has annual sales of about $85 million and is breaking even, Danone said.

Heinz, meanwhile, is growing its condiments business, along with snacks and infant nutrition.

``We have identified many opportunities to expand sales of the HP, Lea & Perrins and Amoy brands,'' Heinz Chairman and CEO William Johnson said.