Kerry has agreed to acquire Niacet as it seeks to strengthen its food protection and preservation strategy. The deal, worth €853 million (US$1 billion), is expected to close by the end of the third quarter of 2021, subject to customary closing conditions and regulatory approvals.
The acquisition will be funded via a combination of existing liquidity and a dedicated bridge facility which will be repaid out of proceeds from the sale of Kerry Consumer Foods’ Meats and Meals business for approximately €819 million (US$976 million), as announced last week, and which is expected to complete in Q4.
Urgent need to drive change
Speaking to FoodIngredientsFirst, Bert De Vegt, vice president, food protection and preservation at Kerry, says there is an urgent need for all of us to make better use of existing resources.
“Food protection and preservation are now more important than ever before. Thirty percent of all food is wasted and 700 million people get sick from food each year. Sustainability is a key concern for consumers and our food and beverage customers are actively trying to improve their products to address these concerns,” he explains.
De Vegt also shares three key themes you see dominating the preservation arena; food waste avoidance, food safety and clean label.
“Our research has shown us that 60 percent of consumers are more concerned about food safety since the outset of COVID-19,” he underscores.
“Companies in certain geographies can only achieve a limited amount of preservation (i.e. shelf life days) either by clean label or conventional preservation. Using these technologies in combination can mean additional shelf life for customers which leads to less food product waste which is better for everyone including our customer, the consumer and the planet.”
Prioritizing safety systems
Hare Topco, Inc., trading as Niacet, is a global market business specializing in technologies for preservation. The company is positioned in Bakery and Pharma sectors, as well as cost-effective low-sodium preservation systems for both meat and plant-based food across conventional and clean label solutions.
Niacet is differentiated by its exclusive drying and granulation process technologies in its key market categories of Bakery, Meat and Pharma.
Niacet has customers in over 75 countries and key manufacturing sites in Niagara Falls, in the US, and Tiel, in the Netherlands.
For the year ended December 31, 2021, Niacet is expected to have pro forma annualized revenue of about US$220 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of about US$66 million, representing an EBITDA margin of around 30 percent.
Boosting food protection and preservation
Niacet’s complementary capabilities will enhance Kerry’s food protection and preservation strategy to offer new products and technologies in a broader market.
The resulting revenue synergies are expected to enable the Niacet business to significantly outperform the market and deliver at least mid-to-high single-digit volume growth.
The transaction will be growth and margin enhancing to Kerry and is expected to be accretive to adjusted earnings per share in year one.
“The acquisition of Niacet’s complementary product portfolio enhances our leadership position in the fast-growing food protection and preservation market and significantly advances our sustainable nutrition ambition,” says Edmond Scanlon, CEO of Kerry.
“Niacet is a business with market-leading positions, differentiated technologies and a strong and highly experienced management team. We are excited at the potential the combination of our two businesses offers to outperform in this important and attractive market,” Scanlon adds.
The deal was advised by SK Capital on a cash-free, debt-free basis, subject to customary closing adjustments.
Kelly Brannen, CEO and significant minority owner of Niacet, says the transaction affirms the reputation the company has developed as a trusted industry leader with a long-dated track record of making the highest quality products in the market.
“Our focus on innovation has been key to the development and success of our new clean label products. As a result, we have substantially strengthened and grown the company while establishing the next phase of Niacet’s growth. We view the sale to Kerry as a perfect fit. It will allow Niacet to grow at a much faster rate and sell in new markets around the world,” he says.
Ramping up safety
Kerry has been active in food safety and preservation, even more so in light of the COVID-19 pandemic.
Earlier this month, Kerry revealed that it was ramping up its efforts on safety and preservation following a heightened awareness from consumers.
The company also unveiled consumer research confirming growing food safety expectations, particularly in meat, back in April.
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