12th Nov 2024 12:12
(Alliance News) - Kerry Group PLC on Tuesday said it has agreed the sale of Kerry Dairy Ireland as it announced the start of a new, previously announced share buyback programme.
The Tralee, County Kerry-based provider of nutrition products for food, beverage and pharmaceutical markets said it entered into an agreement with shareholder Kerry Co-Operative Creameries Ltd to sell Kerry Dairy Ireland at an enterprise value of EUR500 million.
An extraordinary general meeting has been called for December 19 for shareholders to approve the deal.
Kerry Co-Op has a stake of around 11% in Kerry Group and will cease to be a shareholder under the proposed deal. Further, Kerry Group's shareholding will reduce by about 2.9 million shares, with no public placement of shares involved.
Further, with the sale, the Kerry Co-Op members will become direct owners of Kerry shares worth around 85% of Kerry Co-Op's current shareholding. The remaining 15% will be redeemed as part of the consideration for the disposal.
Kerry plans to initially sell a stake of around 70% under the proposed deal for EUR350 million, while it will retain the remaining 30%. Kerry then aims to transfer the remaining 30% in Kerry Dairy Ireland to Kerry Co-Op over the coming years for around EUR150 million until maximum the end of July 2035, with closing to occur by the end of 2035 at the latest.
The sale will result in two "leading" businesses, Kerry Group and Kerry Dairy Ireland, which will be "better positioned to focus on their respective strategies and capital allocation priorities."
Kerry expects the sale to have a positive impact on its overall financial metrics with an improved revenue volume growth volume and an enhanced overall sustainability profile.
The sale will lead the way to Kerry becoming "a pure play taste & nutrition company".
The company said: "The proposed transaction will result in greater portfolio clarity, a more simplified business structure, and increased capital deployment focus across Kerry's core taste and nutrition business, while further strengthening Kerry's ability to execute against its strategic priorities."
Kerry said Kerry Dairy Ireland generated revenue of EUR1.28 billion in 2023, down 17% from EUR1.54 billion in 2022.
Separately, Kerry announced the launch of a new share buyback programme worth up to EUR300 million, which it had announced back in October. The buyback will be completed by the end of June next year. The purpose of the programme is to reduce its share capital, so all the shares will be cancelled.
Kerry shares were down 1.1% to EUR91.40 each on Tuesday midday in London but were up 3.4% to EUR90.55 each in Dublin.
By Tom Budszus, Alliance News slot editor
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