Kagome’s shares surged after the Japanese manufacturer of ketchup and vegetable juices acquired a majority stake in a California-based tomato processing company for $243.3 million.
Recently, shares were up by 12% at 3,527 yen, having risen as much as 13% earlier on Monday morning.
On Friday, after the market closed, Kagome announced its acquisition of a 50% stake in Ingomar Packing, adding to its existing 20% stake in the company, known for producing tomato paste and diced tomatoes.
The acquisition is expected to enhance Kagome’s capabilities in tomato cultivation and processing, thereby strengthening its presence in the U.S. market.
Kagome anticipates a roughly 30% increase in revenue and a doubling of net profit following the acquisition. For 2023, it projects a net profit of 9.00 billion yen ($60.7 million) on revenue of Y222.00 billion. The stake is being sold by four California-based farming businesses, including two companies led by Ingomar Chief Executive Greg Pruett, which produce raw tomatoes and other crops.
To finance the acquisition, Kagome secured a bridge loan and plans to partially repay it by selling treasury shares within approximately one year.
In the fiscal year ending June, Ingomar reported $53.1 million in net income on revenue of $310.5 million, with net assets totaling $115.5 million.