IRCA’s acquisition of Kerry’s sweet and cereal ingredients unit expected to create €1bn global leader

12-Jan-2023 - Last updated on 12-Jan-2023 at 12:39 GMT

Kerry's Sweet Ingredients Portfolio is a leading manufacturer of sweet and cereal ingredients for the global market. Pic: GettyImages

IRCA – a portfolio company of private equity firm Advent International – has signed a definitive agreement to procure the Sweet Ingredients Portfolio of the Dublin-headquartered global provider of taste and nutrition solutions for the food, beverage and pharma sectors for €500m.

Kerry’s unit is a leading manufacturer of sweet and cereal ingredients – sweet particulates, chocolate confections, baked inclusions, variegates and fruit purées – for the bakery, cereal, confectionery, dairy and ice cream sectors in Europe and the US. Its operational footprint incorporates 10 plants (four in the US and six across Europe). The expected attributable financial results for the year ended 31 December 2022 include revenues of €405m and EBITDA of €41m.

Global leader

The acquisition is IRCA’s third since it was acquired by Advent – one of the world’s largest PE investors, with over 400 PE investments across 41 countries and €90bn in assets under management – in July 2022, including the bolt-on of Italian pistachio ingredients producer Anastasi Group, and artisanal fruit-based ingredients company Cesarin SpA.

Advent said the Kerry unit procurement – combined with IRCA’s existing portfolio – is expected to create a global leader in semi-finished food ingredients, with around €1bn in revenue.

For over 100 years, IRCA has been supplying the professional channel with chocolate, creams and high-quality semi-finished ingredients. The company distributes its products across more than 100 countries and runs 13 production facilities in Italy, US, Belgium, and Vietnam, with a 1,000-strong workforce producing products tailored to the latest industry trends.

“This acquisition represents a strong fit with our portfolio, with its highly complementary product and technological capabilities, and help us to become a truly global player,” said Massimo Garavaglia, IRCA’s CEO.

“The Sweet Ingredients Portfolio is a high-quality business with a differentiated set of technologies, and we are excited to welcome their talented team who, we believe, share our passion and drive to deliver the best for their customers and consumers.

“We look forward to helping the Sweet Ingredients Portfolio realise its full potential as part of the IRCA family.”

Added Francesco Casiraghi, MD of Advent, “We are delighted to welcome this best-in-class sweet ingredients business to the IRCA family, which would represent a major step in our goal of creating a genuine global leader in semi-finished food ingredients.

“There are so many exciting long-term opportunities for this combination, and we look forward to supporting the management team in this next phase of growth for the business.”

Strategic move

Kerry Commercial Bakery Ingredients — Commercial bakery ingredients. Pic: Kerry

The Irish major – which creates ingredients that reach more than a billion people around the world – said the divestiture is part of its strategy to refine its core taste and nutrition business, which it has recently been boosted with a number of more tech-focused acquisitions, including Spanish biotech company BioSearch, US botanical extract producer Natreon, and food production and preservation specialist Niacet.

“This transaction represents another strategic development in Kerry’s evolution, as we continue to look to enhance and refine our Taste & Nutrition portfolio, aligned to the areas where we can create the most value,” said Edmond Scanlon, CEO of Kerry Group.

The sale is expected to close in the first half of 2023, following relevant regulatory approvals and routine closing adjustments. It will consist of a cash sum of €375m, plus a €125m interest bearing vendor loan note.