By Shares of Kagome, the renowned Japanese maker of ketchup and vegetable juices, experienced a significant boost after the company announced its acquisition of a majority stake in a California-based tomato processing company for a staggering $243.3 million.
The news of the acquisition sent Kagome’s shares soaring, with a recent increase of 12% to 3,527 yen. At one point, the shares even rose as much as 13% earlier on Monday morning.
In an official statement released on Friday after the market closed, Kagome revealed that it had purchased a 50% stake in Ingomar Packing. This acquisition complements Kagome’s existing 20% stake in the producer of tomato paste and diced tomatoes.
By acquiring Ingomar Packing, Kagome aims to bolster its capabilities in tomato cultivation and processing, ultimately strengthening its foothold in the U.S. market.
Kagome has high expectations for the acquisition’s impact on its financials. They anticipate an approximate 30% increase in revenue and a doubling of net profit as a direct result of this strategic move. Kagome has projected a net profit of 9.00 billion yen ($60.7 million) on revenue of Y222.00 billion for the year 2023.
The sellers of the stake are four California-based farming businesses specializing in the production of raw tomatoes and other agricultural crops. Among these sellers are two companies led by Ingomar Chief Executive Greg Pruett.
To finance the acquisition, Kagome secured a bridge loan and plans to sell treasury shares to partially repay the loan within approximately one year.
As for Ingomar Packing, for the fiscal year ending in June, it reported $53.1 million in net income from a revenue of $310.5 million. The company’s net assets amounted to $115.5 million.
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