Kerry Co-op Shareholders Debate €500 Million Dairy Deal
Source: DairyNews.today
More than 200 shareholders and milk suppliers of Kerry Co-op gathered in Tralee on Friday, November 22, to discuss the proposed €500 million acquisition of Kerry Dairy Ireland from Kerry Group. The meeting, organized by the Irish Farmers’ Association (IFA), comes ahead of a crucial shareholder vote on the deal next month.
Under the agreement, Kerry Co-op will acquire a 70% stake in Kerry Dairy Ireland for €350 million, with Kerry Group retaining the remaining 30%. The co-op holds a call option to purchase the final 30% stake by mid-2030. If approved, the first phase of the deal is expected to conclude by January 2025.
Shareholder Vote and Information Campaign
Approval requires a two-thirds majority from A and B shareholders present at a Special General Meeting (SGM) on December 16, 2024, in Killarney. To ensure transparency, Kerry Co-op has planned a series of information sessions starting November 25 across Kerry, Limerick, Cork, and Clare.
Jason Fleming, Kerry IFA Chair, described the deal as the "hot topic" at recent branch meetings. He acknowledged shareholder concerns over the delay between the deal's announcement and the co-op’s information events, emphasizing the need for informed decision-making.
Key Details and Tax Concerns
The deal involves a share exchange and redemption process. Kerry Co-op's €1.7 billion stake in Kerry Group will be restructured, with 85% of shares converted to Kerry Group plc shares and the remaining 15% used to acquire Kerry Dairy Ireland.
Shareholders sought written assurances from tax authorities to clarify the implications of the share conversion, with calls for a formal indemnity letter. Board representatives stated that advisors PwC and EY had secured assurances from Revenue confirming no immediate tax impact unless shares are sold or transferred.
Addressing Milk Supply and Governance
Concerns were raised about potential declines in milk supply and dissatisfaction with pricing. The co-op's vice-chair, Conor Creedon, reassured attendees, emphasizing the profitability and resilience of Kerry Dairy Ireland, which has been stress-tested for varying supply scenarios.
“This is a well-run business. If this deal goes through, profits will directly benefit co-op shareholders and support competitive milk prices,” Creedon said.
Discussions also highlighted governance issues, with calls for equal representation for non-milk-supplying shareholders (B and C categories) on the new co-op board. Currently, only A shareholders—active milk suppliers—can hold board seats.
Arbitration and Future Implications
A contentious €50 million fund proposed to resolve an ongoing arbitration case on milk pricing sparked debate. Critics labeled it a “bribe” as it applies only to milk supplied between 2015 and 2020. Proponents, however, view it as a fair settlement contingent on the deal’s approval.
Farmers voiced concerns about the deal's long-term impact on farm businesses, particularly regarding input costs and competitive milk pricing. “Milk price is the foundation of our livelihoods,” one supplier stressed.
Path Forward
While some shareholders praised the proposal as a strategic win, others urged caution. Fleming concluded the meeting by emphasizing the importance of attendance at upcoming sessions, ensuring all stakeholders have their questions addressed.
The outcome of the December vote will determine whether the co-op regains control of milk processing, a move seen by many as pivotal for securing the future of Kerry's dairy industry.
Shareholder Vote and Information Campaign
Approval requires a two-thirds majority from A and B shareholders present at a Special General Meeting (SGM) on December 16, 2024, in Killarney. To ensure transparency, Kerry Co-op has planned a series of information sessions starting November 25 across Kerry, Limerick, Cork, and Clare.
Jason Fleming, Kerry IFA Chair, described the deal as the "hot topic" at recent branch meetings. He acknowledged shareholder concerns over the delay between the deal's announcement and the co-op’s information events, emphasizing the need for informed decision-making.
Key Details and Tax Concerns
The deal involves a share exchange and redemption process. Kerry Co-op's €1.7 billion stake in Kerry Group will be restructured, with 85% of shares converted to Kerry Group plc shares and the remaining 15% used to acquire Kerry Dairy Ireland.
Shareholders sought written assurances from tax authorities to clarify the implications of the share conversion, with calls for a formal indemnity letter. Board representatives stated that advisors PwC and EY had secured assurances from Revenue confirming no immediate tax impact unless shares are sold or transferred.
Addressing Milk Supply and Governance
Concerns were raised about potential declines in milk supply and dissatisfaction with pricing. The co-op's vice-chair, Conor Creedon, reassured attendees, emphasizing the profitability and resilience of Kerry Dairy Ireland, which has been stress-tested for varying supply scenarios.
“This is a well-run business. If this deal goes through, profits will directly benefit co-op shareholders and support competitive milk prices,” Creedon said.
Discussions also highlighted governance issues, with calls for equal representation for non-milk-supplying shareholders (B and C categories) on the new co-op board. Currently, only A shareholders—active milk suppliers—can hold board seats.
Arbitration and Future Implications
A contentious €50 million fund proposed to resolve an ongoing arbitration case on milk pricing sparked debate. Critics labeled it a “bribe” as it applies only to milk supplied between 2015 and 2020. Proponents, however, view it as a fair settlement contingent on the deal’s approval.
Farmers voiced concerns about the deal's long-term impact on farm businesses, particularly regarding input costs and competitive milk pricing. “Milk price is the foundation of our livelihoods,” one supplier stressed.
Path Forward
While some shareholders praised the proposal as a strategic win, others urged caution. Fleming concluded the meeting by emphasizing the importance of attendance at upcoming sessions, ensuring all stakeholders have their questions addressed.
The outcome of the December vote will determine whether the co-op regains control of milk processing, a move seen by many as pivotal for securing the future of Kerry's dairy industry.
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