TRALEE, IRELAND — Kerry Group PLC on June 21 announced it has reached an agreement to acquire Hare Topco, Inc., which does business as Niacet Corp., from an affiliate of investment funds advised by SK Capital Partners and other shareholders.
Kerry said it will pay €853 million ($1.016 billion).
Based in Niagara Falls, NY, Niacet specializes in preservation technologies, and is a category leader in the baking and pharmaceutical segments, Kerry said. The company also offers low-sodium preservation systems for meat and plant-based foods.
Niacet products in baking preservation and quality enhancement include calcium propionate, sodium propionate, the Proniaturel line of antimicrobial additives, calcium stearoyl lactylate, calcium acetate and potassium propionate.
Kerry described Niacet’s financial profile as attractive. In 2021, the company is expected to generate sales of $220 million and EBITDA of $66 million, equating to an EBITDA margin of about 30%. Excluding synergies, Kerry said it is paying 15.4 times anticipated 2021 EBITDA.
Once the transaction is completed, Niacet will be integrated into the food protection and preservation platform of Kerry. The acquisition will boost Kerry’s food protection and preservation strategy, allowing the company to “offer new products and technologies in a broader market.” Kerry said “revenue synergies” will allow the Niacet business to grow at a mid- to high-single-digit volume rate. Kerry said the acquisition will boost its margins and will be accretive to adjusted earnings per share in the first year.
“The acquisition of Niacet’s complementary product portfolio enhances our leadership position in the fast-growing food protection and preservation market and significantly advances our sustainable nutrition ambition,” said Edmond Scanlon, chief executive officer of Kerry. “Niacet is a business with market leading positions, differentiated technologies and a strong and highly experienced management team.”
Kerry said the acquisition will enhance its ability to meet customer needs across clean label and conventional solutions. Niacet’s strong position in conventional organic acids represents a valuable complement to Kerry’s strong position in clean label.
Increasing consumer interest in food safety and a rising concern about the environmental impact of food waste also made Niacet attractive, Kerry said.
Kelly Brannen, CEO of Niacet and a significant minority shareholder in the business, said Niacet has built a strong track record since the company was acquired by his family in 1978.
Commenting on Niacet’s partnership with SK Capital, Mr. Brannen said, “We have strengthened and grown the company substantially, while establishing the next phase of Niacet’s growth. We view the sale to Kerry as a perfect fit. It will allow Niacet to grow at a much faster rate and sell in new markets around the world. We are very pleased to become part of the Kerry family."
Kerry said the transaction is expected to close before the end of September and will be funded by existing liquidity and a dedicated bridge facility. The latter will be repaid by proceeds Kerry said it will receive for its Consumer Foods, Meats and Meals business, in an €819 million transaction, as announced June 17.
Kerry’s products for the baking industry include emulsifiers, preservatives, gum acacia, enzymes and texturants.