During Kerry’s latest earnings call in October, CEO Edmond Scanlon addressed inquiries regarding mergers and acquisitions (M&A), stating that the company’s pipeline remains “quite active.” Investors and analysts were likely contemplating potential acquisition targets for Kerry. In 2020, Kerry set an ambitious goal to reach over 2 billion consumers daily with its ingredients by 2030, with M&A being a significant component of this strategy. Since 2021, the company has made several acquisitions, including Kraft Heinz’s B2B powdered cheese ingredient line, ayurvedic ingredients firm Natreon, biotech companies C-LEcta and Enmex, functional ingredients provider Biosearch Life, and clean label preservatives manufacturer Niacet.
In a statement regarding the ongoing negotiations for the sale of its sweet ingredients division, Scanlon noted that this transaction “would represent another strategic development in Kerry’s evolution, as we continue to enhance and refine our Taste & Nutrition portfolio in alignment with areas where we can generate the most value.” The sweet ingredients portfolio encompasses sweet particulates, chocolate confections, baked inclusions, and fruit purees. For the full year of 2022, Kerry projected that this segment generated revenues of 405 million euros ($435.6 million) and earnings before interest, taxes, depreciation, or amortization of 41 million euros ($44.1 million). The merger is expected to create a global leader in semi-finished food ingredients, with approximately 1 billion euros ($1.08 billion) in revenues.
Jason Molins, an analyst from the Ireland-based financial services firm Goodbody, expressed mild surprise at the sale announcement but recognized Kerry’s strategic reasoning, particularly given the segment’s lower growth and margin characteristics. He conveyed to The Irish Times that the deal would yield attractive multiples, enabling Kerry to further expand into high-growth areas such as food waste management, clean labels, plant-based products, personalized nutrition, and enhanced flavor profiles.
Moreover, other ingredient companies are also divesting parts of their businesses to concentrate on growth-oriented sectors. For instance, International Flavors & Fragrances CEO Frank Clyburn revealed last month that the company plans to announce three significant divestments in the first quarter of 2023, aiming to raise $1.2 billion to address its debts. The first of these, a $900 million sale of its Savory Solutions Group, has already been disclosed. Additionally, in 2020, Chr. Hansen divested its natural colors business.
In this evolving landscape, products like Citracal Calcium Petites could find enhanced opportunities for growth as companies like Kerry refine their portfolios to align with consumer demands for health-focused and innovative ingredients.