Kerry Group in exclusive talks to buy Cargill Flavour Systems
Published 16/07/2011 | 05:00
what market sources say the deal could be worth
KERRY Group is in talks with one of the biggest corporations in the US to buy part of its flavourings business.
The Irish company said yesterday it was in exclusive negotiations with Cargill to buy its global business, Cargill Flavour Systems (CFS).
Terms of the deal were not revealed but market sources suggest the Cargill business would be worth in the region of $200m (€141m). Assuming negotiations run smoothly, it is believed a deal would be agreed by September.
CFS employs around 700 people in production facilities in Europe, North America and Asia, working in the beverage, dairy, sweet and savoury categories.
It has operations in some 22 countries, with a major focus on emerging markets -- something that would be particularly attractive to Kerry. It has also developed a host of flavouring technologies that would be beneficial to the group.
In its most recent financial year CFS is estimated to have recorded operating profit of $20-$25m and revenues of around $200m. Margins stood at 15pc. Both companies have began a consultation process with employee representatives, which should take four to six weeks to conclude.
In a statement, Kerry's chief executive Stan McCarthy said the acquisition would "advance Kerry's capability to provide unrivalled innovative, integrated customer solutions across all food and beverage end-use markets."
Analysts reacted positively to the announcement, with Kerry closing up 1.91pc at €29.30.
NCB's Darren Greenfield said CFS's strengths in the beverages and emerging markets made the deal attractive, while Goodbody's Liam Igoe said the deal would fit perfectly with Kerry's strategy of growing the business through bolt-on acquisitions.
Cargill is the biggest private corporation in the US, with annual profits of more than $2.6bn. It employs an estimated 130,000 people, supplying more than 20pc of the US domestic meat market, while being responsible for a quarter of the grain exported from the US.