Boosted by strength from North American sales, H.J. Heinz (NYSE:HNZ) posted a 20% jump in fiscal third-quarter profits and revealed a deal worth a reported $723 million to acquire a majority stake in a Brazilian food maker.
The Pittsburgh-based ketchup maker said it earned 84 cents a share last quarter on sales of $2.72 billion. Analysts had called for EPS of 82 cents on $2.71 billion in revenue. Volume grew 0.5%.
Heinz said its organic sales jumped more than 14% in emerging markets, led by China, India, Indonesia and Russia.
But most of the focus was on Heinz’s decision to take an 80% stake in Quero Alimentos, which had annual sales of about $325 million. The company is a leading Brazilian manufacturer of tomato-based sauces, tomato paste, ketchup, condiments and vegetables.
The acquisition gives Heinz its first footprint in Brazil, the world’s fifth largest country by population and one of its fastest growing nations.
“The Quero brand is a natural fit with the global capabilities of Heinz and gives us a scalable growth platform in Brazil, a key Emerging Market with nearly 200 million consumers and a growing economy,” Heinz CEO William Johnson said in a statement.
Heinz said it plans to complete the buyout in the next several months and it expects it to modestly eat into its fiscal 2012 earnings, while adding to its bottom line in fiscal 2013.
Heinz didn’t issue a price tag on the stake in Quero, which has nearly 1,800 employees, but a local financial paper reported the deal was worth 1.2 billion Brazilian reais, or $723 million.“We intend to drive growth in the Quero product line through increased innovation and marketing, by applying our proven capabilities with the modern trade and by leveraging our technical expertise,” Johnson said.