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Kerry Group has agreed to sell its Irish dairy operation to Kerry Co-Operative Creameries for €500m (£415m) in a move that completes its transformation into a pure play ingredients company.
Kerry Dairy Ireland is made up of brands across cheese, cheese snacks, dairy snacks and dairy spreads, such as Cheestrings, Dairygold, Golden Cow, Kerrymaid and Low Low, which are sold in chillers in UK and Irish retailers.
It also owns the Dairy Ingredients business, which makes functional dairy proteins, nutritional dairy bases and cheese systems.
Co-Operative Creameries will initially buy 70% of the business, with Kerry retaining the other 30%, with the rest to be transferred over a number of years.
Kerry said the deal would result in two leading businesses - Kerry Group and Kerry Dairy Ireland - with each better positioned to focus on their respective strategies.
Kerry Dairy Ireland generated revenues of €1.3bn and EBITDA of €53.4m in 2023.
The proposed deal includes seven manufacturing facilities and more than 1,500 employees.
Kerry added the move represented “an important step” in its evolution to becoming a “fully dedicated global taste and nutrition solutions company”, following significant portfolio development over recent years.
CEO Edmond Scanlon said: “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 outperformance, strong margin progression, and delivering greater returns for our shareholders.”
Kerry Co-op chairman James Tangney added: “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.”
Farmer-owned Kerry Co-op was formed in 1974 and is the largest shareholder in Kerry Group.
As part of the deal, 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 transaction.
If the deal goes ahead, the Co-op will cease to be a shareholder in Kerry.
Shares in Kerry Group sank 4.2% this morning to €88.55.
Morning update
Volumes have taken a hit at the supermarkets in October as food price inflation outstripped sales growth, according to the latest data from Kantar.
Take-home sales at the grocers increased 2% in the four weeks to 3 November to reach £11.6bn, but prices rose by 2.3%, slightly up on September’s figure.
However, Kantar reckoned that it was the biggest sales month for the supermarkets of 2024 so far as shoppers stocked up for Halloween and started to look ahead to Christmas.
Ocado retained its place as the fastest-growing retailer over the past 12 weeks, with sales up 9.5%, with Lidl (+7.4%) keeping top spot as the fastest-growing bricks-and-mortar supermarket for the 15th period in a row.
Editor’s note: Kantar has since provided an update of its figures published. Kantar originally gave sales growth of 2.3% for the four weeks. It has now amended the figure to 2%. It means volumes were flat in the period, rather than in decline as stated in the original story above.
McBride has upheld its profit guidance for the year after continuing to deliver a “strong financial and operational performance”, with revenues in the early months of the financial period ahead of last year.
Ahead of its AGM, the private label household cleaning products supplier said in the trading update that it would be the third consecutive year of revenue growth, with profitability levels significantly ahead of the historical average.
Input costs for the main raw and packaging materials remain in line with forecasts made at the beginning of the financial year.
However, with only four months of the financial year complete, the group remained “cautious” about the macro-economic environment and potential increased volatility in commodity markets adversely impacting costs.
Shares in McBride are up 1.8% to 112p so far today.
Cake Box has hailed strong growth in the first half as it increases sales, profits and dividends.
The desserts retail chain boosted revenues by 4.3% to £18.7m in the six months to 30 September, with pre-tax profits up 16.3% to £2.8m.
It benefitted from increased volumes thanks to 20 new store openings in the prior year, with seven more opened in the half.
Interim dividend was pushed up 17.2% to 3.4p a share to reflect the group’s continued strong cash generation and the confidence in its growth prospects.
CEO Sukh Chamdal said: “We enter the second half with ongoing positive trading momentum and are on track to deliver full year performance in line with market expectations.”
Cake Box shares fell 1.6% to 185p in early trading.
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