UPDATE 1-Heinz to buy China's Foodstar soy sauce maker

Mon Jun 21, 2010 9:43am EDT

* Heinz to pay $165 mln at deal closing

* Sees deal accelerating growth in China

* Shares flat

NEW YORK, June 21 (Reuters) - HJ Heinz Co HNZ.N said on Monday that it agreed to acquire Foodstar, a Chinese soy sauce maker, from private equity firm Transpac Funds, as it seeks to accelerate growth in emerging markets.

Heinz will pay $165 million at the closing of the deal and an earn-out potentially payable in 2014 based on the performance of the business.

Heinz already produces ABC, a brand of soy sauces in Indonesia. The company has also been operating in China since the 1980's, when it opened a factory in Guangzhou to produce Heinz infant cereal.

The acquisition would increase Heinz's annual sales in China to about $300 million and enable the company to enter China's fast-growing soy sauce market, worth about $2 billion at retail.

Heinz shares were flat at at $46.25 (Reporting by Martinne Geller, editing by Dave Zimmerman)

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