Heinz close to Farley deal

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HEINZ, the big international foods group seeking to expand its baby foods line, is thought to be in talks with Boots about purchasing its Farley Health Products subsidiary, the makers of Farley's rusks and other infant staples.

Unconfirmed US press reports suggested a sale would be announced as soon as next week. The deal would increase Heinz's worldwide infant-food sales by 15 per cent to about dollars 750m, round out its product line, and make it Britain's leading supplier of baby food.

Heinz, which has identified infant and child nutrition as a potential source of sales growth, is already a leading producer of tinned and bottled baby food, particularly in Commonwealth countries. Despite relatively weak sales in the US, the businesses account for about 10 per cent of Heinz's worldwide turnover.

But cereals, formula and biscuits remain a larger market than so- called 'wet foods', and Heinz's limited offerings in these areas have proved weak competitors.

Wall Street analysts said Tony O'Reilly, Heinz's chief executive, had promised double-digit earnings growth, based in large part on the booming demand for its baby products.

In March, Heinz turned in a disappointing third quarter, reporting a 20 per cent decline in profits from the same period in 1993.

The company made dollars 128m during the three months to 26 January, or 50 cents a share, compared with dollars 162m, or 62 cents a share, during the third quarter of its 1993 fiscal year.

Sales also fell - to dollars 1.71bn from dollars 1.77bn - the result of a relatively strong dollar and the sale of some divisions.

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