H.J. Heinz Co., the ketchup maker which agreed to be acquired in a $23 billion buyout this month, will sell its China packaged food business to Zhengzhou Sanquan Foods Co.
Zhengzhou Sanquan signed a deal with H.J. Heinz’s subsidiaries, Country Ford Development Ltd. and Heinz (China) Investment Co., to buy Shanghai Long Fong Co. on Feb. 22, Henan-based Zhengzhou Sanquan said in a statement to the Shenzhen stock exchange dated Feb. 23.
Zhengzhou Sanquan rose to its highest in 11 months in Shenzhen trading. The company, which sells frozen meals and snacks such as fried chive dumplings on the mainland, said the purchase will help increase competitiveness and expand market share. The acquisition will be financed using internal cash, it said, without giving a value for the deal.
The sale is in line with “Heinz’s global strategy to de-emphasize non-core frozen food businesses outside the U.S.” the Pittsburgh-based foodmaker said in an e-mailed statement. “The decision to seek a buyer for our Long Fong frozen foods business in China is unrelated to the merger agreement with Berkshire Hathaway and 3G Capital.”
Heinz agreed Feb. 14 to sell itself to Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital Inc. for about $23 billion.
Shanghai Long Fong is involved in food packaging and frozen food on mainland China. The Long Fong brand sells products in eight major categories including dumpling, rice ball, dim sum and hot-pot base, according to Heinz’s website.
Zhengzhou Sanquan, which resumed trading today after being halted on Feb. 22, gained 3 percent to 29.33 yuan, the stock’s highest close since March 19.
The transaction is expected to be completed in four months or less, Heinz said. Three calls to the main telephone line of Zhengzhou Sanquan returned a busy signal.