Back in late 2024, when the decision was being made by members of Kerry Co-op on whether to proceed with the takeover of Kerry Dairy Ireland, there were questions about the valuation being put on the business.

That €500m figure was based, we were told, on the four-year average earnings before interest, taxation, depreciation and amortisation (EBITDA) of €71m.

Using that figure, we can see that the valuation worked out at seven times EBITDA.

However, the scant financial figures published by Kinisla recently showed that the processor had EBITDA of €80.8m in 2024 and €86.8m in 2025. This gives an average of €83.8m across the two years.

If a €500m valuation were to be calculated on those figures, it gives a multiple of just under six times.

Similarly, if the seven times multiple used in the pitch to co-op members were to be applied, the sale price should have been closer to €600m.

Difference

It is notable that there is a considerable difference between the 2024 EBITDA figure for Kerry Dairy Ireland (KDI, now Kinisla) as reported by Kerry Group and as reported by Kinisla.

According to Kerry Group accounts for 2024, the EBITDA for KDI was €62.8m, well below the €80.8m reported by Kinisla.

When contacted by the Irish Farmers Journal, a spokesperson for Kerry Group said that as the matter is a characterisation of Kinisla results, it was a question for the processor.

A spokesperson for Kinisla said the difference is explained by “once-off specific transaction costs specific to the PLC [Kerry Group]”. The spokesperson confirmed that Kinisla EBITDA for 2024 was €80.8m.

History

Looking back a little further in history, the 2021 proposed takeover of Kerry Group’s dairy assets by the co-op was for a transaction valued at around €650m.

That deal was structured with the co-op taking an initial 60% holding in a joint venture, with the balance to be purchased within three years.

The deal agreed in December 2024 gives the co-op 70% of Kinisla and allows up to 10 years to buy the balance. Plus, the price tag, at €500m, is significantly lower.

Once we take account of the higher earnings seen in the last two years when compared with the average of the previous four years, it is clear that Kerry Co-op did get better value when compared with what was on the table in 2021.

While direct comparables to the acquisition of Kerry Dairy Ireland are not readily available, some takeovers in the wider dairy industry which have gone though recently were at considerably higher valuations than that seen in this deal.

The sale by Fonterra of its consumer and associated business to Lactalis in 2025 was at a reported EBITDA multiple of around 10 times.

Danone is close to agreeing the acquisition of Australia’s Made Group at a valuation reportedly in excess of 12 times EBITDA. Both of these companies are in the fast-moving consumer goods sector, where higher profit margins are attainable.

While Kinisla produces a broad range of dairy products, it does have a meaningful presence in that space through its Cheestrings business.

Until we see the full accounts for Kinisla, there will still be a question or two outstanding over the performance of the processor, but on the numbers available on trading to date, it certainly looks like the co-op got good value.