Kerry transforms with two €800+ million deals
Kerry Group plc, the global taste & nutrition company, has agreed to acquire Hare Topco, trading as Niacet Corp, for €853 million and is simultaneously selling its Meats and Meals business in the UK and Ireland to Pilgrim’s Pride Corporation, the global food company with customers in more than 100 countries, for a cash consideration of €819 million (£704 million).
Niacet is a global market leader in technologies for preservation. It has clear leadership positions in Bakery and Pharma, and cost-effective low-sodium preservation systems for Meat and plant-based food across both conventional and clean label solutions. Niacet is differentiated by its proprietary drying and granulation process technologies in its key market categories of Bakery, Meat and Pharma. The business has customers in over 75 countries and key manufacturing sites in Niagara Falls (USA) and Tiel (The Netherlands).
Niacet has an attractive financial profile. For the year ended 31 December 2021 Niacet is expected to have pro forma annualised revenue of c.$220 million and EBITDA of c.$66 million, representing an EBITDA margin of c.30%. The transaction value of $1.015 billion represents an implied EV/EBITDA multiple of 15.4x excluding synergies. Kerry is acquiring Niacet from an affiliate of funds advised by SK Capital Partners, LP and other shareholders.
Following the acquisition, Niacet will be integrated into Kerry’s global food protection and preservation platform. The transaction is expected to close by the end of the third quarter of 2021 subject to customary closing conditions and regulatory approvals.
The addition of Niacet’s complementary capabilities will enhance Kerry’s food protection and preservation strategy to offer new products and technologies in a broader market. The resulting revenue synergies are expected to enable the Niacet business to significantly outperform the market and deliver at least mid-to-high single digit volume growth. The transaction will be growth and margin enhancing to Kerry and is expected to be accretive to adjusted earnings per share in year one.
Edmond Scanlon, CEO of Kerry, commented; “The acquisition of Niacet’s complementary product portfolio enhances our leadership position in the fast growing food protection and preservation market and significantly advances our sustainable nutrition ambition. Niacet is a business with market leading positions, differentiated technologies and a strong and highly experienced management team. We are pleased to welcome the Niacet team to Kerry and we are excited at the potential the combination of our two businesses offers to outperform in this important and attractive market.”
Disposal of Meats and Meals business
The Meats and Meals business is a best-in-class provider of convenience food solutions, with leading brands and longstanding relationships with major retailers. The financial results for the year ended 31 December 2020 attributable to the business were revenue of €828 million, EBITDA of €86 million, profit before tax of €63 million, and gross assets of €521 million.
The Meats business is a leading manufacturer of branded and private label meats, meat snacks, food-to-go and meat-free products in the UK and Ireland. Its brands include Richmond, Denny, Galtee, Fridge Raiders and Rollover. The Meals business primarily serves the UK market and specialises in authentic ethnic chilled and frozen ready meals, multi-cuisine ready to cook ranges, and home delivery meals under the Oakhouse brand.
Edmond Scanlon explained: “Kerry’s strategy for the past 30 years has been to continuously evolve our portfolio, as we progressed on our journey to becoming a market-leading Taste & Nutrition company. This transaction further enhances Kerry’s focus as a leading business to business ingredient solutions provider for the food, beverage and pharmaceutical markets. Pilgrim’s is a global provider of high-quality food products and I am convinced they will make an excellent future owner of the Meats and Meals business. I wish to thank the 4,500 employees of the business for their contribution to Kerry over many years.”
Fabio Sandri, CEO of Pilgrim’s, commented: “We are pleased to have the opportunity to position Pilgrim’s as a leading prepared foods and branded products player through this acquisition. We look forward to welcoming Kerry Consumer Foods’ Meats and Meals business’ talented management team and other team members, led by Nick Robinson, to the Pilgrim’s family, and we look forward to working together to drive growth and deliver value for all of our stakeholders.”
The proceeds from the sale will be used for general corporate purposes and the continued strategic development of the Taste & Nutrition business. The transaction is expected to close in the final quarter subject to customary closing conditions and regulatory approvals. Kerry Group will now separate and realign the remaining dairy-related activities within the Consumer Foods Business. The strategic review of the dairy business has been completed and there will be no disposal of the dairy business at this time.
