Mmm-mmm spicy! The Campbell Soup Company, synonymous with the all-American kitchen for 125 years, said yesterday that it would join the nation's torrid salsa craze, acquiring Pace Foods Ltd. of San Antonio, the world's largest producer of Mexican sauces, for $1.115 billion.

Salsas, those spicy mixtures of jalapeno peppers, tomatoes, onion and garlic, have overtaken ketchup in retail dollar sales, thanks to their high markup, analysts said, though Americans still consume more pounds of ketchup. Mexican sauce sales have grown at an annual rate of 13 percent since 1988 to $800 million in grocery store, club store and restaurant sales. Thanks to their sharp taste and low fat count, the fast-growing Mexican sauces have been appearing on everything from pizzas to bagels.

The price was high. Campbell, which pursued the privately held Pace for years, will have to borrow to buy the company, and the selling price is five times sales and more than 20 times operating earnings before income and taxes. Moody's Investors Service placed Campbell's Aa2 rating for senior unsecured debt under review for a possible downgrade; Moody's cited not only the increase in debt but also "the strategic logic of this acquisition."

"It's a sensible enough deal from a strategic perspective, albeit an expensive one," said Les Pugh, an analyst with Salomon Brothers. In the last decade, he said, "most major transactions in the industry have taken place at 11 to 12 times E.B.I.T. and at two times sales."