US food company H.J. Heinz has agreed to buy Danone's UK-based HP Foods business for about $855 million in a deal that puts HP and Lea & Perrins sauces under the same roof as its own Heinz Ketchup. The cash purchase would help Pittsburgh-based Heinz focus more around core areas like condiments, meals and snacks and infant nutrition, while France's Danone would focus almost exclusively on water, yogurt and biscuits.
Analysts said Heinz was buying a collection of largely UK domestic brands such as HP and Daddies sauces, with only Lea & Perrins Worcestershire sauce a truly global brand.
"It's a highly profitable business and will fit well with Heinz, but it's not a top-notch price because it's not a top notch business," said analyst David Lang at Investec Securities.
Danone's shares were off 0.948 percent at 73.50 euros Monday. Heinz shares were up 13 cents at $36.50 in thin trading Monday morning on the Inet electronic broker system from Friday's New York Stock exchange Close.
Heinz said it expected the acquisition to add to earnings in the first full fiscal year and to close in the next few weeks pending all regulatory approvals.
The deal follows on the acquisition of a majority stake in Russian condiments and sauces maker Petrosoyuz as Heinz shifts its focus from an overhaul of its US business to Europe.
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