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Ireland: Kerry Group In Talks To Acquire Cargill’s Flavours Business

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Ireland: Kerry Group In Talks To Acquire Cargill’s Flavours Business

July 11
11:25 2011

Kerry Group is in talks to buy the US agribusiness giant Cargill’s flavours unit, the company said on Friday, as it expands further into the higher-margin ingredients sector. The talks are expected to 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 capitalisation, earned about two thirds of its €4.96bn of revenues last year from its ingredients and flavours business.

NCB Stockbrokers analyst Darren Greenfield said the Cargill ingredients business, which has revenues of around US$200m, might cost in the region of €250m to €350m. “This would be a good acquisition. It could add another 4 or 5% 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%.”

Commenting on the discussions, Kerry Group Chief Executive Stan McCarthy said: “Kerry is a leading global food ingredients and flavours provider and a leader in development and delivery of consumer preferred taste solutions. The acquisition of Cargill Flavor Systems would again advance Kerry’s capability to provide unrivalled innovative integrated customer solutions across all food and beverage end-use-markets and extend the Group’s market spread in emerging markets”.

Kerry, whose brands include Wall’s sausages, Homepride flour and Cheesestrings snacks, said last month it expected volume growth in ingredients and flavours 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.

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