Northern Foods is hunting for more acquisitions following its purchase of chilled ready meals and snacks supplier Ethnic Cuisine.

CEO Stefan Barden told The Grocer that after snapping up the Swansea-based food manufacturer for an undisclosed sum, Northern Foods was eager to expand its capacity further and was even considering building new factories.

"We would love to buy more companies of a similar size and scale," Barden admitted. "We are exploring lots of possible opportunities and are also keen to talk to small, family-owned companies. We will look for acquisitions first but if we can't buy, we will build further sites in the UK."

Ethnic Cuisine specialises in oriental foods and makes ready meals for Sainsbury's and Brakes. It had gross assets of £13.9m and revenue of £24m at 31 March 2007.

There were no plans to close Ethnic Cuisine's factory and all 350 staff would transfer to Northern Foods, Barden confirmed.

Company founder and MD Meng Yap will remain with the business in the short term to ensure a smooth transition, but the operation will be managed by Robin Walker, MD of Northern Foods' convenience foods business unit.

The acquisition was part of Northern Foods' strategy of focusing on its five core markets of ready meals, sandwiches and salads, pizza, biscuits and Christmas puddings, following a radical restructure of the business last year, said Barden. However, there were no plans to restructure the business further.

"We are looking for slow and steady growth over the next few years and will achieve this through focusing on premium products," said Barden. "Premium products have a good future. Whether there is a recession or not the premium sector always grows."

Price rises to cover soaring commodity costs had successfully been negotiated with retailers, he said. "The discussions were frank and cordial and were over relatively quickly."

Earlier this month, in its half-year results to 29 September, Northern Foods reported that its operating margin had risen to 6.1%, despite rising commodity prices.