Global taste and nutrition company Kerry Group has announced a deal to buy preservatives maker Hare Topco, trading as Niacet, for €853m as it sharpens its focus on its ingredients business.

Niacet is a market leader in technologies for preservation and operates in the Bakery and Pharma sectors, while its low-sodium preservation systems are also used in the Meat and plant based food sectors.

The business has customers in over 75 countries and its key manufacturing sites are in Niagara Falls in the US and Tiel in the Netherlands.

Kerry said the deal, agreed with an affiliate of funds advised by SK Capital Partners and other shareholders, is on a cash-free, debt-free basis, and is still subject to customary closing adjustments.

For the year ended December 2021, Niacet is expected to have pro forma annualised revenue of about $220m and EBITDA of about $66m.

Following the deal, Kerry said that Niacet will be integrated into its global food protection and preservation platform.

Kerry said that Niacet's complementary capabilities will enhance its food protection and preservation strategy to offer new products and technologies in a broader market.

It said the deal will be growth and margin enhancing to Kerry and is expected to be accretive to adjusted earnings per share in year one.

Today's deal is expected to close by the end of the third quarter of 2021 subject to customary closing conditions and regulatory approvals.

Kerry said it will be funded through a combination of existing liquidity and a dedicated bridge facility.

Edmond Scanlon, CEO of Kerry Group

The deal comes at a time of growing demand for longer-lasting food as consumers become more aware of the environmental impact of waste, Kerry Group said.

Edmond Scanlon, CEO of Kerry, said the acquisition of Niacet's complementary product portfolio enhances Kerry's leadership position in the fast growing food protection and preservation market and significantly advances its sustainable nutrition ambition.

"Niacet is a business with market leading positions, differentiated technologies and a strong and highly experienced management team," he said.

"We are pleased to welcome the Niacet team to Kerry and we are excited at the potential the combination of our two businesses offers to outperform in this important and attractive market," the CEO added.

Last week, Kerry Group announced plans to sell its consumer foods' meats and meals business in the UK and Ireland to US food company Pilgrim's Pride for €819m in cash.

The meats business includes branded and private label meats, meat snacks, food-to-go and meat-free products in the UK and Ireland and its brands include Denny, Galtee, Richmond, Fridge Raiders and Rollover.

The meals mainly serves the UK market, providing products to a range of chilled and frozen ready meals as well as home delivery and ready to cook meals to retailers including Sainsburys and Tesco.

In a note, Goodbody Stockbroker said it considered the acquisition of Niacet as a strong strategic fit for Kerry, adding that the deal will help broaden its portfolio of preservation technologies.

"Following the announcement of the disposal of the Consumer Foods and Meats business, we estimated the business had about €2.5 billion of financial firepower to continue to look at acquisition opportunities, especially to high-value add businesses like this morning's Niacet," the stockbrokers said.

"Kerry's share price has underperformed its peer set since the start of Covid, and we would expect this announcement will help narrow that gap," they added.

Kerry Group's shares rose in Dublin trade today.