Kerry snaps up three US food companies for $735m

Food giant Kerry has announced the acquisition of three US-based businesses for $735 million (€642 million), marking its single biggest acquisition announcement to date.

The company is buying Red Arrow Products, Island Oasis and Wellmune to boost its flavouring, beverage and health product lines.

It failed to disclose the price paid for each business but said the deals would be financed through existing credit lines.

Kerry plans to integrate the various technologies developed in these businesses with its own offerings and market them globally.

Wisconsin-based Red Arrow Products produces meat flavouring products for the food sector while Massachusetts-based Island Oasis makes cocktail mixes and customised beverages for the hospitality industry.

The Red Arrow deal, which was only signed on Wednesday, is still subject to regulatory approval.

The third deal will see Kerry acquire Wellmune, a producer if immune-friendly dietary supplements, from US pharmaceutical group Biothera.

The three businesses had a combined revenue of over $300 million last year.

The deals significantly expand Kerry’s US footprint and bring its acquisition spending spree for the year to nearly €900 million.

In August, Kerry reported half-year revenues of €3 billion, up 2.7 per cent on the same period in 2014. Earlier this month, it also opened a new €100 million technology and innovation centre in the Millennium Business Park in Naas, Co Kildare.

The company now ranks as one of the world’s largest suppliers of food ingredients with a global workforce 24,000 and annualised sales of nearly €6 billion.

Its shares closed up 1.2 per cent at €68.30 in Dublin yesterday following the announcement.

Kerry chief executive Stan McCarthy said: “The acquisitions of Red Arrow, Island Oasis and Wellmune, as well as significantly expanding our taste and nutritional solutions portfolio, bring a number of important innovative technology platforms to Kerry.”

“Complementing our existing taste and nutrition leadership positioning and growth strategies, the businesses being acquired present tremendous growth opportunities throughout Kerry’s global developed and developing markets,” he added.

In June, Kerry acquired KFI Savory, a US-based savoury flavour business, from Kraft Food Ingredients for an undisclosed sum.

Other acquisitions this year include US drinks group Insight Beverages, Costa Rica’s Baltimore Spice and Turkey’s PST Pastacilik Gida.

It also entered into a joint venture with Dutch company IOI Loders Croklaan to market infant nutrition Betapol business.

The bulk of the group’s revenue in the period comes from its ingredients and flavours division , which makes a range of products including sauces, infant formula and sweeteners.

Last year, it launched an Irish infant formula brand called “Green Love+” in China, which retails at a hefty €43 per kilo - almost four times the Irish price.