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You Will Not Have The Luck Of The Irish If You Buy Kerry Group Now

Mar. 09, 2020 12:44 AM ETKerry Group plc (KRYAY), KRYAF
Cash-Centered Creep profile picture
Cash-Centered Creep


  • While Kerry Group failed to obtain DuPont's nutrition and biosciences business, it still pursues a responsible M&A strategy.
  • It has a strong balance sheet and an excellent dividend record, supported by its dominant position in taste and nutrition.
  • It is currently trading at a 43% premium.

Irish consumer defensive firm Kerry Group (OTCPK:KRYAY) (OTCPK:KRYAF) is a stock that usually trades at a premium price, and given its dominant position in the global ingredient and flavors sector, one could argue that it deserves to trade at a premium price. However, I do not believe that its current share price is warranted.

Kerry received a recent blow with its failed bid to acquire DuPont's (DD) nutrition and biosciences business, which was picked up by International Flavors & Fragrances Inc. (IFF) for $7.3 billion in December 2019. The deal, which Kerry apparently lost €17.6 million ($19.92 million) in preparing for, has not put the firm off pursuing its M&A strategy, according to Kerry CEO Edmond Scanlon:

There is an ambition and a capability within the organisation that if an acquisition regardless of scale hits a certain set of criteria - the number one being creating value for our shareholders - we would move forward.

For Kerry, moving forward has entailed the acquisition of clean-label food businesses and food protection businesses, and expansion into developing markets. Over the course of the past year, Kerry purchased Ariake USA, Ariake Japan's (OTCPK:AKEJF) North American business, which makes clean-label taste solutions in pork, poultry, and vegetables. Kerry also purchased Southeastern Mills' North American coating and seasoning business in the past year. Both businesses were purchased for $367 million. Developing market volume growth has increased by 10.3% in the Asia-Pacific region, the Middle East, and Africa collectively over the past financial year - a rate of growth three times greater than that of the overall food market in the same regions.

Ireland-based Kerry Group is the dominant player in taste and nutrition worldwide. Image provided by RTÉ.

All of this helps to cement Kerry's position as the dominant player globally in taste and nutrition,

This article was written by

Cash-Centered Creep profile picture
Buy and hold, common stock investor focused on dividends and on value. Interested in various stocks that are suitable for long-term dividend investment. A Buffett admirer, but not a Buffett cultist, and not quite as creepy as my name implies - though certainly cash-centered!

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