KERRY'S €165 MILLION takeover of Breeo Foods is just the type of deal that new boss Stan McCarthy would have had in mind when he said he intended to double revenues over the next five to six years, writes Ciaran Hancock.
Davy estimated it would add 4 cents or 2 per cent to its 2009 earnings per share forecast for Kerry. It added one important rider though: "This may be influenced by the final shape of the deal", which presumably is a nod to the Competition Authority.
Kerry and Breeo combined will have a blockbuster line-up of brands, including Denny, Dairygold, Shaws, Galtee, Low Low, Golden Vale and Mitchelstown. Sources have highlighted a number of potential areas of concern for the Competition Authority.
Kerry and Breeo combined is reckoned to have more than 40 per cent of the €105 million-a-year natural cheese market.
Analysts estimate that Dairygold alone sells about €30 million worth of rashers in a market valued at a salty €107 million. Shaws has a 12 per cent share of the sliced meats segment. Combine that to Denny's cut of the market and you have a powerful player.
Goodbody analyst Liam Igoe says the deal is not a "gimme" but will probably be approved. The answer probably won't be known for some time and it will be interesting to see if the authority forces Kerry to sacrifice something along the way.
