H. J. Heinz Company (NYSE:HNZ) and Kagome Company Limited of Japan today signed agreements for a strategic alliance whose goal is to enable Heinz, a leading global food company, and Kagome, the leader in ketchup and vegetable juices in Japan, to explore ways to align their global operations and product portfolios to accelerate sales growth and reduce operating costs.
Kagome is one of the most prominent food companies in Japan, with annual sales of more than US$1 billion. Heinz is one of the world’s largest food companies, with annual sales approaching US$10 billion.
Both companies expect to improve growth by sharing Kagome’s expertise in sales and distribution within Japan and by leveraging Heinz’s global brands. Heinz is the world’s number-one producer of processed tomato products; Kagome is the top tomato processor in the Pacific Rim. Heinz Japan has a premier foodservice business as well as a growing retail business in frozen meals and snacks and Heinz ketchup and sauces. Kagome has leading market positions in condiments, tomato juice, vegetable juice, barley tea and carrot juice.
Heinz Chairman, President and Chief Executive Officer William R. Johnson said: “The Heinz/Kagome strategic alliance combines the management expertise and capability of two of the best food companies in the world. Japan represents the second-largest food market in the world and Kagome is the number-one food brand in Japan. We see this alliance as another example of Heinz’s increased focus on growth in Asia and an opportunity to explore possible growth initiatives with Kagome in other world markets.”
Mr. Masatsugu Ito, President of Kagome, said, “Heinz has the global reach that will allow us to achieve our dream of bringing Kagome products to consumers all over the world.”
PURSUING A SHARED VISION
The alliance is built on a long-term vision of the potential for the two companies to jointly pursue synergies in their businesses globally. Under the alliance, Heinz and Kagome have three immediate projects: a joint study of new business opportunities in North America; a management services agreement in Japan; and consideration of joint development opportunities in new geographic markets.
The North American project will evaluate the potential in the U.S. market for drinks similar to those sold by Kagome in Japan. This will also give the companies an indication of the appeal of these products in other overseas markets.
As part of the Japan Management Services Agreement, Mr. John Crawshaw, Area Vice President for Heinz Asia, has also been appointed Chairman and Heinz Representative Director for Heinz Japan. Mr. Masahiko Kanie has resigned as Senior Managing Director in Charge of Food Business at Kagome and will become Chief Executive Officer and Representative Director of Heinz Japan, reporting to Mr. Crawshaw. In addition, two operating officers from Kagome will join the seven-person management team at Heinz Japan, and pursue synergies between the two companies in the areas of procurement, production, quality control, distribution and sales. Financial results will continue to be consolidated within Heinz.
Heinz and Kagome are looking at other ways to work more closely together, including a possible joint approach to grow their businesses around the world.
The two companies are also considering a mutual investment. Kagome has made an allotment of approximately 5 percent of its shares to Heinz, with a subscription deadline of January 31, 2002. If subscribed to, the proceeds of this investment would be used by Kagome to invest in new shares of Heinz Japan.
This news release contains forward-looking statements regarding the company’s future performance. These forward-looking statements are based on management’s views and assumptions, and involve risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These include, but are not limited to, sales, earnings and volume growth, competitive and industry conditions, production costs, achieving cost savings programs, acquisitions or disposals of business assets and new product and packaging innovations, and other factors described in “Cautionary Statement Relevant to Forward-Looking Information” in the company’s Form 10-K for the fiscal year ended May 3, 2000, as updated from time to time by the company in its subsequent filings with the Securities and Exchange Commission. In particular, any predictions about these acquisitions could be affected by integration problems; failure to achieve synergies; unanticipated liabilities; participation in new business lines; and changes in competitive environment.
ABOUT HEINZ: With sales approaching US$10 billion, H. J. Heinz Company is one of the world’s leading marketers of branded foods to consumers everywhere, whether in supermarkets, restaurants or on the go. Its 50 companies operate in some 200 countries, with more than 20 power brands, including the Heinz® brand with nearly US$3 billion in annual sales. Among the company’s famous brands are Heinz®, StarKist®, Ore-Ida®, 9-Lives®, Wattie’s®, Plasmon®, Farley’s®, Smart Ones®, Bagel Bites®, John West®, Petit Navire®, Kibbles `n Bits®, Pounce®, Pup-Peroni®, Orlando®, ABC®, Olivine®, Juran® and Pudliszki®. Heinz also uses the famous brands Weight Watchers®, Boston Market® and Linda McCartney® under license. Information on Heinz is available at http://www.heinz.com.
ABOUT HEINZ JAPAN: Heinz Japan Ltd., a wholly owned subsidiary of H. J. Heinz Company, has been providing various products for both consumers and foodservice businesses since its establishment in 1961. Its product line includes a wide range of cooking sauces (such as Demi Glaze Sauce and White Sauce), soups and frozen potatoes and vegetables.
ABOUT KAGOME: The history of Kagome is the history of the tomato in Japan. Now that the tomato is loved throughout Japan, Kagome is aggressively pursuing the tremendous potential and diversity of both tomatoes and other vegetables, utilizing its strong research and development capabilities, manufacturing expertise, and global procurement resources. With 10 sales offices throughout Japan covering both wholesalers and retail operators, as well as six distribution centers connected by Kagome’s own logistics system, Kagome is a strong presence in both Food and Beverages, in both the Institutional & Industrial and Retail markets. With annual sales of over US$1 billion, Kagome is one of the best known and trusted brands in Japan. Kagome has many No.1 tomato products, including Kagome®brand ketchup and tomato sauces. Kagome also has the No.1 position in vegetable-based juice products with its Yasai-Seikatsu® brand and its signature tomato juice product with highly renowned Reverse Osmosis technology. Information on KAGOME is available at http://www.kagome.co.jp in Japanese.