Kerry expands in Europe with £54m purchase

KERRY Group has substantially expanded its food ingredients business in Europe with the acquisition of Ciprial SA for £54 million in total. Ciprial has extensive interests n France and Italy.

Kerry is paying £19 million for Ciprial and is taking on £35 million of the French company's debt.

Kerry already has an extensive food ingredients business in Britain, through its Margetts subsidiary, but the Ciprial acquisition will broaden Kerry's geographic and product base in Europe. Ciprial manufactures candied fruit, fruit ingredients for cakes and is also one of the leading European manufacturers of fruit preparations for ice cream, yogurt and confectionery producers.

Ciprial had sales in 1994 off £70 million and operating profits of £4.9 million, indicating operating margins of around 7 per cent. One analyst described this margin as "more than acceptable" while a Kerry spokesman said it was acquiring a good profitable company whose manufacturing units in Marseilles, Lyons, Rome and Naples were "in good nick". The value off the net assets being acquired are £16.5 million, so the amount of goodwill Kerry would have to write off is negligible. The acquisition would be immediately earnings enhancing,

According to Kerry, Ciprial is well placed to benefit from increased consumer demand for natural fruit products and flavours and the growing use of fruit ingredients in the European yogurt, chilled desserts, ice cream, bakery and confectionery producers. "In the candied fruit sector, Ciprial is the unquestioned market leaders", the Kerry spokesman stated.

The spokesman said that the acquisition will have no negative impact on Kerry's debt reduction target and that the group expects to reach its 70 per cent gearing target for the end of 1996. Debt at the end of 1995 is expected to be around £320 million a gearing of just under 100 per cent. This compares with debt of £371 million at the end of 1994 and indicates clearly the level of free cash that Kerry is able, to generate for debt reduction.

The Kerry spokesman added that the group expects to sell the DCA, bakery equipment subsidiaries in the US for over $50 million? (£31.8 million) and is in talks with a couple of interested parties. Kerry bought these businesses as part of the £250 million acquisition of DCA in late 1994, but made no secret of its plans to sell off what it saw as non core businesses.