Kerry in $80m buy from Swiss

Kerry Group has made its biggest acquisition so far this year with the purchase of the Swiss-owned Shade Foods in the US and Speciality Food Ingredients in Europe for a total of $80 million (£59 million).

The acquisition adds food ingredients particulates technology to Kerry's current capacity which covers cheese, dairy, savoury and bakery ingredients for international food manufacturers.

Simply stated, particulates are the loose pieces in food items such as premium ice creams and, according to a Kerry spokesman, Shade Foods has developed a technology which complements Kerry's current expertise in dehydrated and liquid food ingredients.

Shade Foods manufactures flavoured particulates and speciality chocolate coatings for manufacturers of ready to eat cereals, confectionery, dairy, ice cream and bakery products.

The company currently supplies manufacturers in the US and Europe, but Kerry intends to extend this to other regions using its existing base in South America and the Asia-Pacific regions.

Kerry is paying $80 million in cash to Shade Foods/SFI's parent company, the Swiss agricultural commodities group Andre. In the year to the end of 1998, the two companies had total sales of $90.7 million with earnings before interest, tax and depreciation of $9.1 million.

This puts the acquisition on an multiple of 8.8 times, a reasonable multiple for a company which brings Kerry complementary technology, according to one analyst.

Shade Foods and SFI employ 400 people with four plants - three in the US, in Kansas, California and Iowa and a fourth in Tilburg in the Netherlands.

Demand for particulates ingredients is growing by 10-12 per cent a year in a number of sectors of the food industry, including breakfast cereals, high nutrition foods, baked goods, confectionery and premium ice cream/dairy products.

According to Kerry, Shade Foods and SFI have established partnerships with major multinational food processors and have collaborated on product development and adding value to branded prepared foods and food service products through its particulates technology.

Kerry group managing director Mr Denis Brosnan said: "This flavoured particulates business complements our existing technologies and customer base."