Kerry Group to sell dairy division to Kerry Co-Op in €500M deal

The Kerry Group has entered into an agreement with Kerry Co-Operative Creameries Limited to sell Kerry Dairy Holdings (Ireland) Limited to the Co-Op in a €500 million (US$531 million) deal. Kerry Dairy Ireland is fully owned by Kerry.

Under the proposed transaction, the Co-Op will initially acquire a 70% interest in Kerry Dairy Ireland, while Kerry will retain a 30% interest.

Both parties have also agreed to certain call-put option arrangements, which will transfer the remaining 30% in Kerry Dairy Ireland to the Co-Op in the future.

The Kerry Group says that the planned deal will result in two leading businesses that are better positioned to focus on respective strategies.

Kerry Group will provide taste and nutrition solutions for the food, beverage and pharmaceutical markets, while Kerry Dairy Ireland will focus on being a leading Irish provider of dairy consumer products and dairy ingredients.

Kerry’s dairy

Kerry Dairy Ireland consists of dairy consumer products, with a range of brands across cheese, cheese snacks, dairy snacks and spreads.

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.

The deal also brings consumer products and value-add dairy ingredient activities closer to the dairy farmers and broader dairy ecosystem, while creating one of the largest dairy processors in the country, notes the company.

The Co-Op members will become direct owners of Kerry shares equivalent to 85% of the Co-Op’s current shareholding. The remaining 15% of the Co-Op’s shareholding in Kerry will be redeemed as part of the consideration for the Disposal, following which the Co-Op will cease to be a shareholder in Kerry and Kerry’s issued share capital will reduce by approximately 2.9 million shares.

Edmond Scanlon, CEO of Kerry Group, says: “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 and nutrition solutions and an end-to-end industry leader in dairy.”

The deal represents an important step in Kerry’s evolution to becoming a fully dedicated global taste and nutrition solutions company.“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 and nutrition company, with sustainable nutrition at its core, while also supporting our financial objectives of continued market outperformance, strong margin progression and delivering greater returns for our shareholders.”

James Tangney, chairman of Kerry Co-Op, adds: “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.”

“Pure play taste and nutrition company”

The deal 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 the Consumer Foods Meats & Meals business and the Sweet Ingredients portfolio.

The company stresses that the proposed transaction will result in greater portfolio clarity, a more simplified business structure and increased capital deployment focus across Kerry’s core taste and nutrition business, while further strengthening Kerry’s ability to execute against its strategic priorities.

The transaction will involve no public placement of Kerry Group plc shares.

The Phase 1 transaction is expected to complete by the end of January 2025. From the date of completion of the Phase 1 Transaction, Kerry will no longer consolidate Kerry Dairy Ireland in its Group financial statements and will record its 30% interest as an investment.