Sunday 19 November 2017

Kerry follows Cargill bid with purchase of SuCrest

Darragh McCullough

Darragh McCullough

Kerry has announced that it has bought German flavourings group SuCrest for an undisclosed sum.

The move will give Kerry increased penetration into markets in Europe, Russia and the Middle East.

SuCrest, with production and product development facilities in Hochheim, Germany, and Vitebsk, Belarus, and a sales office in Moscow, is a leading provider of sweet ingredients to the bakery, ice-cream, confectionery, cereal and snack sectors in European markets.

SuCrest reported annual revenues of €50m last year. The transaction is subject to regulatory approval but it is expected to be completed by the end of the year.

The deal comes hot on the heals of Kerry's bid for Cargill's global flavours business, which employs 700 in the US, Asia and Europe. Negotiations with staff are ongoing, but the deal is estimated to be worth €141m.

Kerry CEO Stan McCarthy told delegates at the ASA conference that he expected the company to spend €400m on acquisitions before the end of this year. He added that Kerry was in a position to spend €1-2bn on a big business purchase without requiring the company to raise equity on the stock market.

"Sourcing money by raising equity is quite expensive at the moment compared to debt," he said. "Debt is quite cheap at the moment for quality customers. So an aggressive acquisition strategy is where we're at."

Mr McCarthy told delegates who travelled to Maynooth to hear the Kerry boss being interviewed by Today FM's Matt Cooper that Kerry was well into a seven-year programme that was standardising the way the company operated around the world. It employs 23,000 people in 23 different countries.

When asked why Kerry has stuck with traditional milk processing when more than 70pc of its business was now concentrated in ingredients and flavourings, Mr McCarthy emphasised the relative profitability of their dairy processing and food manufacturing divisions.


"We don't want to go too far beyond the UK in relation to our foods business because then we'd end up competing with many of our customers in our ingredients division.

"Our farmer shareholders have great pride in what Kerry has become but they are also realists and know that there may be better ways to add value to their milk other than investing further in the milk business.

"But, having said that, our foods businesses give us as good or better rates of return on the money invested when compared to our ingredients or flavourings divisions."

The Kerry boss said that the focus for research and development at the company was going to be in improving nutrition and "removing the negatives from food" such as salts and fats.

He also highlighted the opportunities for the company in supplying the pharmaceutical industry with lactose-based products.

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