FDBusiness.com

Kerry Group plc has entered into an agreement with Kerry Co-Operative Creameries Limited to sell Kerry Dairy Holdings (Ireland) Limited  to the co-op for a total expected consideration of €500 million. Kerry Dairy Ireland is fully owned by Kerry Group. Kerry Dairy Ireland consists of Dairy Consumer Products, with its leading range of well-loved brands across cheese, cheese snacks, dairy snacks and dairy spreads which can be found in chilled cabinets across retailers in the UK and Ireland. It also comprises the Dairy Ingredients business, which is a leading provider of Irish dairy ingredients including functional dairy proteins, nutritional dairy bases and cheese systems, along with the provision of related agribusiness products and services.

Under the proposed transaction, the Kerry Co-Op will initially acquire a 70% interest in Kerry Dairy Ireland, while Kerry will retain a 30% interest. The parties have further agreed to certain call-put option arrangements which will transfer the remaining 30% in Kerry Dairy Ireland to the co-op in the forthcoming years.

The Proposed Transaction represents an important step in Kerry’s evolution to becoming a fully dedicated global taste and nutrition solutions company. This follows the significant portfolio development over recent years including the build out of its proactive health, food protection and preservation, and enzymes platforms, while also divesting of the Consumer Foods Meats & Meals business and the Sweet Ingredients portfolio. The proposed transaction builds on the successful partnership between Kerry and the Co-Op, which first began in 1974 and will evolve to a new ownership model for Kerry Dairy Ireland.

The deal will also brings consumer products and value-add dairy ingredient activities closer to the dairy farmers and broader dairy ecosystem, thereby creating a vertically integrated Irish Dairy player of scale, which will be one of the largest dairy processors in the country. In order to ensure continuity in Kerry Dairy Ireland’s operations and facilitate an orderly ownership transition, certain transitional services will be provided by Kerry Group to Kerry Dairy Ireland comprising IT services, group shared services, purchasing services and corporate services.

Edmond Scanlon, Chief Executive Officer of Kerry Group, commented: “The proposed transaction represents a significant step in Kerry’s 50 year journey. Our strategy of continuous business development and portfolio evolution aligned to our customers has been a key underpin of Kerry’s success over the years. The proposed transaction will result in a global leader in taste & nutrition solutions and an end-to-end industry leader in dairy. Both businesses are perfectly positioned for success, thanks to the dedication and extraordinary contribution of our people over the years.

“On completion, Kerry will become a pure play global business to business taste & nutrition company, with sustainable
nutrition at its core, while also supporting our financial objectives of continued market out-performance, strong margin
progression, and delivering greater returns for our shareholders.”

James Tangney, Chairman of Kerry Co-Op, commented: “We are very pleased to have reached an agreement that will ultimately deliver full ownership of one of the leading dairy businesses in the country, while also, in effect, releasing c.85% of Kerry Co-Op’s Kerry Group shares into the hands of our members to be retained or sold by each of them at a time of their choosing. Kerry Co-Op and Kerry Group have a shared heritage that has helped create value, pioneer change and shape the dairy industry.

“As direct shareholders in the plc, members will continue to gain from the Group’s progress and, in tandem, the Co-Op will focus on ensuring Kerry Dairy Ireland becomes a platform for future growth.”