Kerry Group has finalized a deal to divest its consumer dairy and ingredients businesses, amounting to a total value of €500 million ($531 million), to Kerry Co-Operative Creameries. This strategic decision, rooted in a long-standing partnership that stretches back to 1974, reflects Kerry Group’s ambition to exclusively focus on its operations in the food and beverage industry.
The agreement to sell Kerry Dairy Ireland has been evolving over the past three years, with discussions notably paused in 2021. This transaction consists of two phases that will occur and be resolved in a sequential manner.
In the first phase, Kerry Co-Operative Creameries will acquire 70% of Kerry Dairy Ireland for €350 million. Kerry Group will initially retain the remaining 30% stake. Subsequently, the second phase of this transaction will be addressed through a call-option process, which gives the Co-op the right to purchase the remaining interest for €150 million before July 2035.
In a statement made today (November 12) to the London Stock Exchange, Kerry Group underscored how this “proposed transaction” signifies its shift toward becoming a sophisticated, dedicated provider of global taste and nutrition solutions.
Previously, in 2021, the group had divested its consumer-facing meats and meals business, which included well-known brands like Richmond sausages and Fridge Raiders, to Pilgrim’s Pride.
The Co-operative will now take ownership of remaining assets related to Kerry Group’s consumer dairy products division. This encompasses a wide range of offerings including cheeses, spreads, dairy snacks, and innovative dairy-free alternatives, alongside hybrid products such as the recently launched Smug blended oats range.
The brands involved in this transaction comprise popular products like Cheestrings, Dairygold, Golden Cow, Kerrymaid, and Low Low, predominantly marketed in Ireland and the UK. On the other side of the deal, the dairy ingredient segment includes functional dairy proteins, nutritional bases, cheese systems, as well as agri-business products and services operating in the southwestern regions of Ireland.
Phase one of the agreement is projected to conclude by the end of January next year, resulting in the transfer of seven manufacturing facilities and more than 1,500 employees to the Co-op. Kerry Group’s shareholders are scheduled to vote on transaction approval during a meeting on December 19.
Edmond Scanlon, CEO of Kerry Group, commented on this transition, stating, “Upon completion, Kerry will evolve into a pure-play global business-to-business company focused on taste and nutrition, with sustainable nutrition as its foundation. This supports our financial objectives of ongoing market outperformance, enhanced margins, and increased shareholder returns.”
By the conclusion of the previous fiscal year, Kerry Dairy Ireland reported gross assets totaling €562 million, although both revenue and profits had declined. Specifically, revenue fell by 16.8% to €1.28 billion, while EBITDA dropped by 24.5% to €53.4 million. Kerry Group noted a profit before tax of €32 million, although comparative figures were not available from the 2023 annual report.
The ongoing partnership between Kerry Group and Kerry Co-Operative Creameries involves the latter holding approximately 11% of the stock in the former, corresponding to around 19 million shares. The transaction will facilitate a share swap or exchange, enabling Kerry to acquire about 85% of the shares in the Co-op held by its members. In exchange, Kerry will issue an equivalent amount of shares valued at approximately 85% of the Kerry shares presently held by the Co-op. The final 15% of the Co-op’s shares will be redeemed as part of the overall consideration for the sale, effectively ending the Co-op’s shareholder status in Kerry.
Chairman of Kerry Co-Operative Creameries, James Tangney, expressed satisfaction with the agreement, stating, “We are delighted to have reached an agreement that will enable full ownership of one of the leading dairy businesses in the country while simultaneously distributing approximately 85% of Kerry Co-op’s shares in Kerry Group to our members at their discretion. As direct shareholders in the plc, our members will continue to benefit from the group’s advancements, while the Co-op concentrates on transforming Kerry Dairy Ireland into a growth-centric platform.”
This development is a significant reflection of the evolving landscape in the food and beverage industry, emphasizing the ongoing consumer trends toward health-conscious options and sustainability. As Kerry Group pivots its focus, stakeholders are positioned to witness its influence within the food and drink business moving forward.
