Heinz buys HP sauce in £470m deal

The buy fits in with Heinz's plan to concentrate on sauces

US food giant Heinz has bought the maker of HP sauce in a £470m ($855m) deal, the company has confirmed.

The group is thought to have beaten UK rivals Premier Foods and Associated British Foods to buy HP Foods.

The purchase from French group Danone is the latest stage in Heinz's current strategy of focusing on ketchups, condiments and sauces.

Danone had bought HP Foods - which also makes sauces under the Lea & Perrins brand - for £199m from Hanson in 1998.

Other brands in the HP Foods stable include Amoy, Daddies and Rajah.

Core condiments

"This acquisition underscores our commitment to become a faster-growing, more focused company," said Heinz president and chief executive William Johnson.

HEINZ BRANDS Heinz tomato ketchup Heinz baked beans Jack Daniels grilling sauce Linda McCartney meals Weight Watchers Farleys John West Source: HJ Heinz

Buying HP Foods was "consistent with our strategy to drive growth in our profitable and expanding core condiments and sauces category", he said.

Heinz said it had identified many opportunities to expand sales of the HP, Lea & Perrins and Amoy brands.

The deal gives Heinz a perpetual licence to market Amoy Asian sauces in Europe, enabling it to tap European consumers' taste for newer, piquant flavours like black bean as well as HP sauce, which is associated with more traditional pie-shop meals.

Heinz views Lea & Perrins as "an historic global brand" which has spread world-wide since it was first served to passengers on ocean liners in 1837. Lea & Perrins and HP sauce are exported to 75 countries.

Heinz said it expected the deal would boost its earnings for the first full financial year after completion.

All change

The deal comes at a busy time in the food industry.

Heinz is the midst of a shake-up. It declared in May it would be concentrating on its big brands and large markets and planned to sell off some marginal products.

HEINZ YEAR TO APRIL 2005 Group sales: $8.91bn Pretax profit: $1.05bn Source: HJ Heinz

It is focusing the group around four core businesses - ketchups, condiments and sauces, meals and snacks, and baby foods.

Earlier this month, Premier Foods agreed to buy Marlow Foods, owner of meat substitute Quorn, in a £172m deal.

And last week, RHM - maker of goods including Mr Kipling Cakes and Hovis bread - announced plans to float on the London Stock Exchange.

HP Foods employs 450 workers at two UK factories - in Birmingham and Worcestershire - and one US plant in New Jersey.