Kerry Group to Sell Dairy Division to Kerry Co-op in €500m Deal

Kerry Group to Sell Kerry Dairy Ireland for €500m

Kerry Group has agreed to sell its consumer dairy and ingredients businesses, known as Kerry Dairy Ireland, to Kerry Co-operative Creameries. The total transaction value is €500 million, which will be completed in two stages.

Stage One

• Acquisition Date: By the end of January 2025
• Value: €350 million
• Percentage of Ownership: 70% of Kerry Dairy Ireland will be acquired by Kerry Co-operative Creameries.

Stage Two

• Acquisition Date: Up to July 2035
• Value: €150 million
• Percentage of Ownership: The remaining 30% will be acquired by Kerry Co-operative Creameries through a call-option process.

Key Points

• Business Overview: Kerry Dairy Ireland is a significant dairy and ingredients business that processes over 1.1 billion litres of milk annually from 2,740 family farms in Munster. It employs over 1,500 staff and exports to over 58 countries[2][4].
• Portfolio Brands: The company owns various dairy food brands such as Cheestrings, Dairygold, EasiSingles, LowLow, Kerrymaid, and Charleville[2][4].
• Transaction Impact: Upon completion, Kerry Group will focus on becoming a global pure play business-to-business taste and nutrition solutions company, while Kerry Co-operative Creameries will take full ownership of Kerry Dairy Ireland, allowing the co-op to focus on ensuring Kerry Dairy Ireland becomes a platform for future growth[1][3].

Financial Details

• Revenue: In the fiscal year 2023, Kerry Dairy Ireland generated revenue of €1.283 billion and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of €53.4 million[2][3].
• Tax Implications: For Irish resident individuals, there will be no upfront tax charge on this transaction. Any tax on capital gains will only become payable in the event of a subsequent sale or transfer of the Kerry Group shares concerned[3].

Stakeholder Perspective

• Kerry Group’s Evolution: The proposed deal represents an important step in Kerry Group’s evolution to focus on taste and nutrition solutions, while divesting from less profitable consumer-facing businesses such as meats and meals[1][3].
• Kerry Co-op’s Future Plans: James Tangney, chairman of Kerry Co-operative Creameries, is pleased with the agreement, noting that it will ultimately deliver full ownership of a leading dairy business and release 85% of Kerry Co-op’s Kerry Group shares into the hands of its members for them to retain or sell as they choose[1][3].

Conclusion

The sale marks a strategic shift for both companies, allowing Kerry Group to concentrate on its taste and nutrition business while Kerry Co-operative Creameries gains full control over its dairy operations and brands. This transaction is significant for the dairy industry, supporting the growth and sustainability of dairy farming families in the region.