Kerry bid for Breeo may face snag

Food giant Kerry is working to resolve potential competition issues that might arise if its bid for the consumer food brands controlled by Reox Holdings proves successful.

Kerry's rival bidders for the brands include Irish private equity firms Ion Equity and Jaguar Capital and London-based private equity group CapVest.

The Reox portfolio includes some of the best known Irish food brands, among them the cheese labels Mitchelstown and Calvita, bacon and sausage label Galtee, and bacon and ham label Shaws.

Reox also produces Dairygold, a leading brand in the dairyspread sector.

While Kerry is believed to have identified considerable synergies that could be achieved if it takes control of the portfolio, it is also believed to be examining possible competition issues that might arise in the event of a takeover.

The Kerry group, which yesterday declined to comment, controls the bacon label Denny, Charleville cheese and dairyspreads such as Low Low, Move Over Butter and Kerrymaid.

Reox was spun-off from the Dairygold organisation last year to grow its property, consumer foods division and 4Home DIY businesses.

The company initiated the sale process some weeks ago after receiving an unsolicited approach from Ion Equity for its consumer foods unit, which is known as Breeo Foods Ireland.

Valuations in the range of €160 million to €200 million have been mooted for the Reox portfolio, although it is believed that bids have not reached the top end of that scale.

The process is now entering its final phase.

Reox recently reported a pretax profit of €20.6 million for its first full year of trading to September 30th, up from €7.8 million for the nine months to September 30th, 2006.

Turnover rose to €343.8 million, compared to €268 million, including turnover from discontinued operations, for the previous accounting period.

While Breeo Foods had a turnover of €261 million at September 30th, Reox does not disclose profits for each of its three divisions.