Kerry Group has paid $35 million (€41.14 million) for US speciality food ingredients company Armour Food Ingredients. Priced at 0.9 times forecast sales for 2000, the deal will expand Kerry's food ingredients and flavourings operations in the US. No profit or full-year sales performance figures were released for Armour, which was sold by the consumer foods group, ConAgra. Stating that the company was profitable, a Kerry spokesman said ConAgra did not release figures for the companies within its group.

The deal would be "moderately" earnings enhancing for Kerry in the first year, he added. Kerry will pay for Armour out of its cash flow. With cash flow of about €200 million a year, the group is in a strong position to fund acquisitions. Kerry described Armour as "a perfect fit" given the group's food ingredients business and US exposure. The business complemented Kerry's Beatreme operations and further strengthened its leadership positions in the snack and convenience sectors of the US market, according to Kerry Ingredients Americas chief executive, Mr Stan McCarthy.

Based on forecast Armour sales of $40 million for the current year, the $35 million price is at the lower end of the 0.9 to 1.2 times sales range usually applied to Kerry acquisitions. While Kerry does not break down the operating profit margins of its different US operations, results for the six months to the end of June show an overall margin in the US of 11.8 per cent. Applying this margin to Armour, the company could produce annual operating profits of about $4.7 million.

Armour produces savoury flavouring, cheese and dairy flavourings and speciality lipid powders for the US food industry. The business operates out of two manufacturing plants - in Springfield, Kentucky and Albert Lea, Minnesota - and employs 160 people.

Kerry's results for the six months to the end of June showed that its operations in America accounted for 28 per cent of group turnover and 41 per cent of group operating profits. The latest acquisition will add capacity as Kerry's existing 14 US plants are at full capacity. "This is a relatively small but very important acquisition. There will be synergies with our existing business and we are taking on no overheads," the Kerry spokesman said.