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Kerry gets second bite at buying ingredients business

Pat Boyle

KERRY Group is being tipped as a potential buyer of the ingredients group Chr Hansen after it emerged that the French group PAI Partners is preparing to sell the business.

PAI paid €1.1bn for Hansen back in 2005, winning a bidding war in the face of stiff competition from various food group's including Kerry.

But just over four years on the business is once again being prepared for sale -- PAI is reported to be considering either a public flotation of the Danish-based business or a straight trade sale.

While a spokesman for Kerry refused to be drawn on what he termed "speculation" Goodbody stockbrokers analyst Liam Igoe said Hansen would be "a very strong fit" for Kerry's bio-ingredients operation. Hansen is also a global player in cultures, enzymes and flavours, another area which would dovetail nicely with Kerry's global interests.

"There may be an opportunity for interested parties to bid for the company as an alternative to an IPO (flotation).

"At the lower end of the suggested valuations, we think Hansen would be of interest to Kerry," Mr Igoe said.

The Goodbody analyst reckons Kerry could fund up to €800m from debt, with the balance funded through a new equity issue.

Transactions

While he would not comment on the likelihood or otherwise of a bid for Hansen, the spokesman said "there may be a couple of small transactions before the end of the year".

Separately, Kerry issued an interim management statement yesterday in which it said full year earnings per share should come in at the upper end of the range of between 160c to 165c.

With 10 months of the year gone, Kerry has enjoyed volume growth of 1.5pc overall, with ingredients business sales up 3pc and consumer foods dropping back 0.8pc.

The best performance came in Asia, up 9pc, while Europe, the Middle East and Africa remains challenging with volumes up 2.3pc. "Dairy systems suffered from the significant downturn in primary dairy markets," Kerry reported.

In the US volumes grew 3pc, with "excellent results from its technology platforms and its new Kerry Centre in Beloit, Wisconsin.

The consumer foods business has been hit by the fall in sterling against the euro but it reported solid margin improvement due to the group's efficiency programme.

Work continues with the integration of the Breeo Foods business, despite the fact that the Competition Authority is pressing ahead with an appeal to the Supreme Court as it looks to have its original rejection of the takeover reinstated.

However, the High Court did not put a stay on the completion of the deal after Kerry won its appeal and progress with the integration has been swift.

"It was a good deal for us, particularly in light of the competition we have seen in the retail sector," the spokesman said.

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