KERRY'S NEWLY-installed chief Stan McCarthy has executed his first major acquisition in a drive to double the food group's annual sales to €10 billion with a €165 million deal to buy out the consumer food brands owned by Reox, the Diarygold spin-off, writes Arthur Beesley, Senior Business Correspondent.

The transaction with Reox's food unit Breeo values the portfolio at 11 times earnings before interest tax depreciation and amortisation of €15.1 million. Under negotiation since late last year, the deal was structured in a way that enables Reox to retain ownership of properties in Roscrea, Michelstown and at the Long Mile Road in Dublin.

Though subject to regulatory approval, the deal will see Kerry take control some of the best-known Irish food brands. These include the cheese labels Mitchelstown and Calvita, bacon and sausage label Galtee, the bacon and ham label Shaws, and leading dairy-spread brand Dairygold.

Before going ahead with the deal, Kerry is thought to have worked to eliminate any competition issues that might arise in light of its ownership of the bacon label Denny, Charleville cheese and dairyspreads such as Low Low, Move Over Butter and Kerrymaid.

Kerry shares lost 0.46 per cent in a downbeat market at €18.515 last night. The deal includes Breeo's chilled foods distribution service.

"The impact of the acquisition on the group is subject to the timing of the completion of the transaction is not expected to have a material impact on group earnings per share in the current year," Kerry said.

Reox is likely to use the proceeds of the transaction to develop its property portfolio. The company, which retains the right to the Dairygold name, was spun-off from the Dairygold co-op in 2006 to grow its property, consumer foods division and 4Home DIY businesses. It retains a food unit in the Netherlands.

Reox initiated the sale process last autumn after receiving an unsolicited approach from Ion Equity for its Irish consumer foods unit. Kerry emerged as preferred bidder. Merrion Capital advised Reox. Kerry did not engage external advisers.