Japan's Kagome Corporation has entered into an agreement to buy Preferred Brands International, a US-based natural and ethnic food group.

The acquisition sees Kagome enter the US consumer foods area and the company flagged the fast growth of ethnic food sales in the market, which generated sales of US$3.4bn in 2013. According to Kagome, PBI has a 61% share of the US ethnic convenience food sales.

"PBI and Kagome will conduct joint development of enticing food products, utilising to the fullest the vegetable food products, beverages and other owned resources, on a foundation of nature and health," Kagome said. "PBI’s high level of marketing strength and the expansive U.S. sales network will be utilised to give these products increased added value, in addition to the growth of existing business."

In addition to US expansion, the company expects to grow in the Indian foodservice sector, where PBI supplies restaurant chains with products including frozen vegetable pies and patties, pasta sauce, and tomato ketchup.

Kagome has focused on strengthening its foodservice business which supplies tomato products to global resturant chains, focusing mainly on the US, Portugal and Australia. In 2013, Kagome established a joint venture with Indian food manufacturer Ruchi Soya Industries and Japanese trading company Mitsui & Co.

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"As we aim to expand institutional/industrial-use business directed toward global restaurant chains, PBI’s excellent production facilities and advanced research and development technology will give the Company a significant synergistic effect, including streamlining the product portfolios for existing business, and enhancing the collaborative sales growth strategy," Kagome said.

Kagome added the transaction was not expected to have a material impact on its results but the group did detail its targets for PBI. In the medium term, Kagome believes PBI can generate sales of JPY10bn (US$83.9m) and JPY1.5bn in operating income.

Financial details of the transaction were not disclosed.