Who will buy Kelco?

Lehman brothers bank holds the bulk of the CP Kelco shareholding (71.43%), but thats likely to change soon! With the recent sale of the Hercules shares going to the Huber Corporation and with Huber's acquisition of Noviant, the largest CMC manufacturer in the world the Huber corporation must be one of the front runners for acquiring the remaining shares. It would fit the perceived strategy that Huber wishes to become a major player in hydrocolloids and would make them the largest player in xanthan and pectin as well as CMC with a very respectable position in carrageenan on top.

Kerry group have also been talked about as a possible bidder and they have acquired some gum arabic processing and recently acquired the Quest hydrocolloids business. So Kerry have been building a hydrocolloids business but not has a primary strategic aim. The Kerry hydrocolloids acquisitions have come has part of much larger acquisitions, but they will doubtless be interested.

In any acquisition talks these days we cannot rule out Danisco. After acquiring the Rhodia ingredients business purchasing Kelco would make Danisco a giant in pectin, carrageenan and xanthan. Is it too soon after the Rhodia acquisition?

Who are the less obvious candidates? The CP Kelco business is very food oriented (well at least the CP part) and that makes it an interesting target for companies from the same background as Kerry Foods. A large food ingredients producer looking to get into higher added value products. Tate and Lyle have stated they will be entering the xanthan market, maybe acquisition is a more sensible entry strategy than building a new plant? Another new player in the market is Carghill with their new xanthan business, is it too early for Carghill?