Kerry Group is likely to make a series of small to medium-sized acquisitions this year, Kerry chief executive Mr Denis Brosnan has stated.
After Kerry's annual meeting in Tralee, Mr Brosnan said there had been little rationalisation among the larger group of ingredients manufacturers in the past year but that a lot of medium-sized companies had been sold.
Later in the day, it was announced that Pernod Ricard has agreed in principle to sell San Giorgio Flavors (Italy) to Kerry. San Giorgio Flavors is a leading Italian manufacturer of flavour ingredients, with a portfolio of 2,000 savoury and sweet flavours for consumer food segments.
Based in Turin, San Giorgio employs 87 people. The sale is part of Pernod Ricard's divestment of non-core businesses. Kerry has spent #62.6 million (£49.3 million) in the first half of the year on five small acquisitions in the US, France and Italy. These were Alferi Laboratories, Creative Seasonings & Spices and Iowa Soy in the US, San Giorgio Flavors in Italy and Corol in France. These business had combined sales last year of #51.2 million and earnings before interest, tax and depreciation of #6.5 million.
Mr Brosnan said Kerry had targeted acquisitions costing #600 million in the current year. He expects another five or six acquisitions in the $20-$25 million range over the remainder of the year, boosting Kerry's presence in the ingredients market in North and South America.
Overall, Mr Brosnan repeated Kerry's target of doubling its sales to #5 billion over the next five years. This will require acquisitions costing around #2.5 billion over that period. "You pay a dollar for every dollar of sales plus or minus 10 per cent," said Mr Brosnan. Mr Brosnan told the meeting that, in the past year, mergers had reduced Kerry's top 20 customers to 10, adding that this rationalisation in the food industry worldwide was an opportunity for Kerry and not a threat.
When asked by one shareholder whether Kerry itself could ever become a takeover target, Mr Brosnan said: "It would be a great pity after 30 years if somebody bigger bought us. What's more likely is that we will buy somebody else. If we stand still we will be devoured and we prefer to be the ones doing the devouring."
