Switzerland's Nestle said on Tuesday that it would buy Chef America for $2.6 billion (€2.7bn) in cash as the world's largest food group tries to cement its position in the fast-growing US frozen food market.
Privately held Chef America is best known for Hot Pockets, frozen sandwiches for use in microwaves. Other frozen snacks include Lean Pockets, Croissant Pockets, Pizza Minis and Toaster Melts.
Nestle said the deal, through its US unit Nestle Holdings, would include taking on Chef America's debts and involve a net transfer of about $2 billion after the effect of tax benefits.
Chef America, based in Colorado, was expected to generate sales of around $720 million this year, an increase of more than 15 per cent from 2001, Nestle said.
"Chef America is an ideal and strategically important complement to our own frozen food activities in the United States," Nestle chief executive Peter Brabeck said in a statement.
Nestle said the Chef America deal was subject to regulatory clearance and was expected to be closed within two months.
The deal comes after Nestle, the world's biggest food company, recently proposed taking over Dreyer's Grand Ice Cream, a leader in the growing premium ice cream market.
In a deal that could be worth up to $12 billion, Nestle is also understood to be in the running to buy US confectionery maker Hershey, which is up for sale. Hershey manufactures Nestle's top-selling Kit Kat chocolate bar under licence in North America, giving Nestle an edge in the race to buy the 108-year-old confectionery maker.
Nestle has declined to comment on the Hershey sale talk but said it is keen to regain the Kit Kat brand in North America. The North American rights to the brand would revert to Nestle should Hershey be sold to another company, consequently making the US group worth less to other potential bidders.