Neogen sells cleaners and disinfectants business to Kersia for $130m

LANSING, Mich. - Neogen Corporation (NASDAQ:NEOG), a food safety solutions provider with annual revenue of $906 million, has completed the sale of its global cleaners and disinfectants business to Kersia Group for $130 million in cash, plus additional contingent consideration based on future business performance, according to a company statement.

The food safety solutions provider plans to use the proceeds to repay $100 million of debt in the current quarter, which is expected to reduce the company’s net leverage by approximately 0.4x on a pro forma basis. According to InvestingPro data, Neogen operates with a significant debt burden, though its current ratio of 3.91 indicates strong short-term liquidity.

"The completion of this transaction marks an important step forward in simplifying and enhancing the strategic focus on our core business," said John Adent, President and Chief Executive Officer of Neogen. "We are confident that Kersia is the right long-term owner for this business and its team." While the company isn’t currently profitable, InvestingPro analysts project a return to profitability this year. Get detailed insights and 8 additional ProTips with an InvestingPro subscription.

Neogen, which operates in over 140 countries, focuses on food safety, livestock, and pet health solutions. The divestiture represents a move to streamline operations and concentrate on its primary business segments.

The transaction was announced in a press release issued by the company on Friday.

In other recent news, Neogen Corporation has announced plans to divest its genomics business as part of a broader strategy to focus on its food safety testing segment. This divestiture is expected to result in a revenue reduction of $150 million and a decrease in EBITDA by a low twenties million in fiscal 2026. Additionally, Neogen has entered into an agreement to sell its cleaners and disinfectants division to Kersia Group for $130 million, with the transaction anticipated to improve profit margins and reduce net leverage. S&P Global Ratings has downgraded Neogen’s issuer credit rating from ’BB+’ to ’BB-’ due to increased leverage and integration issues with 3M Co.’s food safety business. S&P expects Neogen’s adjusted debt to EBITDA to exceed 4x in fiscal 2025, reflecting ongoing macroeconomic challenges. Moody’s Ratings has affirmed Neogen Food Safety’s Ba3 Corporate Family Rating but revised the outlook to negative, citing expectations that the debt/EBITDA ratio will remain above 4 times. These developments underscore Neogen’s ongoing efforts to streamline operations and address financial challenges amid a shifting market landscape.

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