Kerry Group is unlikely to succeed in a bid for the US flavours and fragrances group Bush Boake Allen at a price it is prepared to pay, ABN-Amro Stockbrokers has warned.

Last week, Kerry chief executive Mr Denis Brosnan confirmed that Kerry is in the early stages of due diligence on Bush Boake Allen but cautioned that there is no certainty that Kerry will move into the second phase of the bidding.

Now, ABN-Amro analyst Ms Rebecca Wood has warned that competition for Bush Boake Allen is expected to be high and that BBA's current high share price might lead Kerry to walk away from the bid. BBA is currently trading on some 29.6 times forecast current year earnings "which suggests that without a material bounce in profitability and the availability of substantial synergies the current share price may preclude a deal," says Ms Wood.

"Kerry is known to have walked away from acquisition opportunities on price grounds in the past and we would not be surprised if it were also to bypass this opportunity," she adds.

Following last week's interim results, the ABN-Amro analyst has revised her year-end target for the Kerry share price from €15 to €16.