DUBLIN | Fri Jul 15, 2011 11:20am EDT

DUBLIN (Reuters) – Irish food firm Kerry Group (KYGa.I) is in talks to buy the U.S. agribusiness giant Cargill’s CARG.UL flavors unit, the company said on Friday, as it expands further into the higher-margin ingredients sector.

Cargill said talks would last between four and six weeks, but neither company commented on the value of the acquisition, which would add around 700 employees to Kerry’s current 20,000 headcount.

Kerry, Ireland’s third biggest listed company by market capitalization, earned about two thirds of its 4.96 billion euros ($7.02 billion) of revenues last year from its ingredients and flavors business.

NCB Stockbrokers analyst Darren Greenfield said the Cargill ingredients business, which has revenues of around $200 million, might cost in the region of 250 million to 350 million euros ($354-495 million).

“This would be a good acquisition.It could add another 4 or 5 percent to earnings and keep growing the business,” Greenfield said. “Kerry are very bullish on acquisitions in the ingredients space, which has margins of around 10-15 percent.”

In a statement Kerry said it was in exclusive talks with Cargill, which it said “may or may not” result in an acquisition.

Kerry, whose brands include Wall’s sausages, Homepride flour and Cheesestrings snacks, said last month it expected volume growth in ingredients and flavors will be roughly double that of the consumer food sector.

The firm is one of the largest producers of cheese ingredients and has significant operations in savoury and sweet ingredients.

Cargill, which employs 131,000 people in 66 countries, is one of the world’s largest privately held corporations.

Its flavors business has production facilities in Europe, North America and Asia, supplying drinks, dairy, sweet and savoury food producers.

(Reporting by Conor Humphries; Editing by Greg Mahlich)