Kerry Group acquires preservation group Niacet for €853m

Irish food firm Kerry Group has announced the acquisition of Hare Topco, trading as Niacet, for €853 million on a cash-free, debt-free basis.

The company announced details of the deal with an affiliate of funds advised by SK Capital Partners and other shareholders on Monday.

Niacet is a global market leader in technologies for preservation. Kerry Group said it has “clear leadership positions” in bakery and pharma, and cost-effective low-sodium preservation systems for meat and plant-based food.

Niacet is differentiated by its proprietary drying and granulation process technologies in its key market categories of bakery, meat and pharma. The business has customers in more than 75 countries and key manufacturing sites in Niagara Falls in the United States and Tiel in the Netherlands.

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The transaction is expected to close by the end of the third quarter of this year subject to customary closing conditions and regulatory approvals.

The transaction will be funded via a combination of existing liquidity and a dedicated bridge facility.

The bridge facility will be repaid out of proceeds from the sale of Kerry Consumer Foods’ meats and meals business for about €819 million per its announcement last week, which is expected to complete in the fourth quarter of the year.

For the year ended December 31st, 2021, Niacet is expected to have pro-forma annualised revenue of about $220 million and earnings before interest, taxes, depreciation and amortisation (ebitda) of about $66 million, representing an margin of about 30 per cent.

Following the acquisition, Niacet will be integrated into Kerry’s global food-protection and preservation platform.

Synergies

Kerry Group said the resulting revenue synergies are expected to enable the Niacet business to “significantly outperform the market” and deliver at least mid-to-high single-digit volume growth.

The transaction will be growth- and margin-enhancing to Kerry and is expected to be accretive to adjusted earnings per share in year one.

Edmond Scanlon, chief executive of Kerry Group, said: “The acquisition of Niacet’s complementary product portfolio enhances our leadership position in the fast-growing food-protection and preservation market and significantly advances our sustainable nutrition ambition.

“Niacet is a business with market-leading positions, differentiated technologies and a strong and highly experienced management team. We are pleased to welcome the Niacet team to Kerry and we are excited at the potential the combination of our two businesses offers.”

Kelly Brannen, chief executive and significant minority owner of Niacet, said the sale was a “perfect fit” for the company.

“We are proud of the rich heritage we have built in Niacet, dating back to when my family purchased Niacet in 1978,” he said.

“This transaction affirms the reputation we have developed as a trusted industry leader with a long-dated track record of making the highest-quality products in the market.

“We view the sale to Kerry as a perfect fit. It will allow Niacet to grow at a much faster rate and sell in new markets around the world. We are very pleased to become part of the Kerry family.”