Kerry Group Divests Dairy Operations to Refocus on Taste and Nutrition
Source: DairyNews.today
Kerry Group has entered into an agreement to sell Kerry Dairy Holdings (Ireland) Limited to Kerry Co-Operative Creameries Limited, in a deal valued at approximately €500 million. This strategic divestment enables Kerry Group to concentrate on its core business in taste and nutrition, reinforcing its position as a leader in food, beverage, and pharmaceutical solutions.
A Strategic Transition to Core Competencies
The sale includes Kerry Dairy Ireland’s consumer products and ingredients portfolio, featuring well-known brands such as Dairygold and Cheestrings. Despite generating €1.28 billion in revenue in 2023, the dairy division faced a decline fr om €1.54 billion in 2022, with EBITDA decreasing from €70.7 million to €53.4 million. This transaction marks a pivotal shift for Kerry as it sheds its dairy assets to intensify its focus on high-growth areas within taste and nutrition, including proactive health, food protection, and sustainable nutrition.
Key Transaction Terms and Structure
Under the agreement, Kerry Group will initially retain a 30% stake in Kerry Dairy Ireland, while the Co-Op will acquire 70% in the first phase of the transaction. Full ownership will transition to the Co-Op over time, ensuring operational continuity and a smooth handover. A fund of €50 million has also been established to address ongoing disputes between Kerry Creameries Limited and certain milk suppliers, promoting a harmonious transition.
Enhancing Focus on High-Growth Markets
This move allows Kerry Group to channel resources into its expanding taste and nutrition segments, supporting industries focused on health and wellness. CEO Edmond Scanlon stated, “The proposed transaction represents a significant step in Kerry’s journey. Our strategy of continuous business development aligned to our customers has been a key underpinning of Kerry’s success.”
Strengthening Ireland’s Dairy Sector
For Kerry Co-Op, the acquisition creates a vertically integrated dairy powerhouse within Ireland, strengthening its capacity to serve farmers and the broader agricultural community. This integration is expected to bolster Kerry Dairy Ireland’s market position, enabling it to seize growth opportunities within the dairy sector.
Financial Impact and Shareholder Approval
The transaction is expected to improve Kerry Group’s EBITDA margin and overall revenue growth profile, with cash proceeds allocated for general corporate purposes. The deal remains subject to approval from Kerry’s independent shareholders and Co-Op members, with a general meeting scheduled for December 19, 2024, wh ere shareholders will cast their votes.
This divestment reinforces Kerry Group’s commitment to its strategic priorities, enabling the company to better serve its markets and drive future growth.
The sale includes Kerry Dairy Ireland’s consumer products and ingredients portfolio, featuring well-known brands such as Dairygold and Cheestrings. Despite generating €1.28 billion in revenue in 2023, the dairy division faced a decline fr om €1.54 billion in 2022, with EBITDA decreasing from €70.7 million to €53.4 million. This transaction marks a pivotal shift for Kerry as it sheds its dairy assets to intensify its focus on high-growth areas within taste and nutrition, including proactive health, food protection, and sustainable nutrition.
Key Transaction Terms and Structure
Under the agreement, Kerry Group will initially retain a 30% stake in Kerry Dairy Ireland, while the Co-Op will acquire 70% in the first phase of the transaction. Full ownership will transition to the Co-Op over time, ensuring operational continuity and a smooth handover. A fund of €50 million has also been established to address ongoing disputes between Kerry Creameries Limited and certain milk suppliers, promoting a harmonious transition.
Enhancing Focus on High-Growth Markets
This move allows Kerry Group to channel resources into its expanding taste and nutrition segments, supporting industries focused on health and wellness. CEO Edmond Scanlon stated, “The proposed transaction represents a significant step in Kerry’s journey. Our strategy of continuous business development aligned to our customers has been a key underpinning of Kerry’s success.”
Strengthening Ireland’s Dairy Sector
For Kerry Co-Op, the acquisition creates a vertically integrated dairy powerhouse within Ireland, strengthening its capacity to serve farmers and the broader agricultural community. This integration is expected to bolster Kerry Dairy Ireland’s market position, enabling it to seize growth opportunities within the dairy sector.
Financial Impact and Shareholder Approval
The transaction is expected to improve Kerry Group’s EBITDA margin and overall revenue growth profile, with cash proceeds allocated for general corporate purposes. The deal remains subject to approval from Kerry’s independent shareholders and Co-Op members, with a general meeting scheduled for December 19, 2024, wh ere shareholders will cast their votes.
This divestment reinforces Kerry Group’s commitment to its strategic priorities, enabling the company to better serve its markets and drive future growth.
