Shares in the Kerry Group have jumped 10p to 820p on the announcement that the group has made a £6.6 million strategic acquisition in Malaysia. In its first move into manufacturing in South East Asia, Kerry has acquired food ingredients company, SDF Foods. The group, which is looking for further acquisitions in this region and in Latin America - and is examining the offer document for Dalgety in the UK - intends to add new technology to the SDF operation and to expand it rapidly.

The strategic move into South East Asia is a response to the move of many of the Kerry's multinational customers into this growing region, according to director of corporate affairs Mr Frank Hayes.

"It was time to establish a real presence in the area. We currently supply our customers there from our plants in the US and Mexico. The major brands are setting up there so we had to move to meet their ingredients needs", he said.

SDF has an annual turnover of £8 million (50 million Malaysian ringgits). Kerry plans to expand SDF rapidly. Turnover will be doubled in the short to medium term and will continue to grow after that, Mr Hayes forecast. He declined to specify the time scale involved but said that the market for food ingredients in the region is growing very rapidly.

The SDF business is at an early stage of development and is concentrated on a small number of basic ingredients. Kerry plans to bring in new technology to the plant and to develop more specialised ingredients for food processors and food service operations such as McDonalds and Kentucky Fried Chicken. Ingredients for breakfast items, food coatings, sauces, snack foods, creaming agents and non-dairy powders will be added in the short-to-medium term.

Food service - all "out of home" eating - is growing at a rate of 20 per cent per annum, Mr Hayes explained. About 90 per cent of SDF's output is exported to food service and food processing markets in the region.

At £6.6 million the price is just over 80 per cent of turnover. No profit figures were disclosed. The acquisition represented good value in terms of the opportunity to grow and develop from a state-of-the-art plant in the region, Mr Hayes said. The processing plant in Johor Bahru was opened in 1993.

The price compares to multiples of up to three times turnover paid for some very large food ingredients businesses. Kerry paid about once turnover for DCA in the US in 1994. A pound for pound turnover/price relationship is not unusual in food ingredients takeovers.

The SDF acquisition gives Kerry a modern under-utilised plant in a growing market with good supplies of raw materials and adds two new ingredients to Kerry's range, palm oil and starch.

Currency weakness in the region, following the recent sharp falls in Asian currencies, has provided opportunities for indigenous manufacturers to replace previously imported products and to meet the ingredients requirements of major multinational food processors which are establishing in North East Asian and South East Asian markets.

Kerry has come into the market after the fall in the value of the Malaysian ringgit, making the acquisition cheaper in Irish pound terms. The relatively modest acquisition will be funded from existing group resources.

SDF was acquired from a consortium of Asian and Danish investors. The deal is subject to approval from the Malaysian Ministry of International Trade and Industry. The new operation will report to the recently established Kerry regional headquarters for its Asian-Pacific operations in Singapore. The group is setting up a technical centre in Singapore to assist and advise customers and potential customers.