Carey negotiated the sale of the 500 million euro sweet ingredients business

Dive Brief:

• Carey is negotiating to sell its confectionery portfolio to IRCA for 500 million euros ($537.6 million). If the deal is successful, the sale is expected to close in the first half of 2023. IRCA is owned by Advent International, a European-based producer of chocolate, cream and semi-finished food ingredients.
• Kerry’s Sweet Ingredients portfolio includes confectionery and cereal products, serving the bakery, cereal, confectionery, dairy and ice cream markets in the US and Europe. It includes four manufacturing facilities in the United States and six in Europe.
• While selling different parts has been a strategy for ingredients companies to focus on, this is Carey’s first major sale in a while. Over the past two years, the Irish-based powerhouse has made several acquisitions, and the only exception was the business in Russia.

Dive Insight:

In response to a question about M&A on Carey’s most recent earnings call in October, CEO Edmund Scanlon said: “It shows that our pipeline remains very active.”

Of course, most investors and analysts are probably wondering about the companies Kerry wants to acquire. In the year In 2020, the company shared its goal of reaching more than 2 billion people per day by 2030, and M&A seems to be a big part of the company’s path to reach it. As of 2021, Carey has acquired Kraft Heinz’s line of commercial-to-commercial powdered cheese ingredients, Ayurvedic ingredients company Natreon, biotech companies C-Lecta and Enmex, functional ingredients company BioSearch Life, and clean label preservative maker Niacet.

In a release about the Sweet Ingredients sale negotiations, Scanlon said the transaction represents another strategic step in Kerry’s evolution as we continue to combine and refine our flavor and nutrition portfolio with areas where we can create greater value.

The portfolio of sweet ingredients includes sweet granules, chocolate sweets, baked toppings and fruit toppings. Carey In the full year 2022, the division had revenue of 405 million euros ($435.6 million) and income before interest, taxes, depreciation or amortization of 41 million euros ($44.1 million). The merger will create a global leader in semi-finished food ingredients with revenues of 1 billion euros ($1.08 billion), the statement said.

Jason Mullins, an analyst at Ireland-based financial services firm Goodbody, told The Irish Times he was somewhat surprised by the sale announcement, but understood Kerry’s strategic rationale, particularly given the division’s low-growth and low-margin profile. Molins told the newspaper that the deal will produce attractive multiples that will help Carey expand into high-growth categories including food waste, clean labels, plant-based, personalized nutrition and enhanced flavor.

Many other elements are selling off businesses so that companies can focus on areas where they can grow their operations. Frank Clyburn, CEO of International Flavors and Fragrances, announced last month that the company will announce three major initiatives to bring in $1.2 billion for the company in the first quarter of 2023. The first, Savory Solutions Group, has already announced a $900 million sale. In 2020, Chr. Hanson sold his natural dye business.