Large Turnout at MDPO Meeting on Proposed €500 Million Kerry Dairy Deal
Source: DairyNews.today
Hundreds of stakeholders attended an information session hosted by the Munster Dairy Producer Organisation (MDPO) on Monday to discuss Kerry Co-op’s proposed €500 million acquisition of Kerry Group’s dairy division, Kerry Dairy Ireland (KDI). The meeting in Newcastle West, County Limerick, highlighted divergent views on the valuation and long-term implications of the deal.
Deal Overview
The proposal would see Kerry Co-op acquire a 70% stake in KDI for €350 million, with Kerry Group retaining the remaining 30% interest. The co-op would have the option to purchase the final stake by 2030, with full ownership transfer required by 2035.
KDI operates seven production facilities in Ireland and the UK, employs over 1,500 people, and manages consumer brands like Cheestrings and LowLow. Its forecasted revenue for 2024 is €1.3 billion.
Concerns Over Valuation
Brian Leslie, an independent financial advisor and Kerry Co-op B shareholder, criticized the €500 million valuation as “crazy,” stating his own assessment placed the company’s worth at €250 million. He argued that environmental challenges, declining milk volumes, and industry overcapacity justify a lower valuation.
Leslie warned that the proposed price would burden the co-op with debt, potentially reducing milk prices for 15 years. “A bad deal is never a good deal,” he said, urging shareholders to vote against the transaction and push for renegotiation.
Dairy Sector Implications
Diarmaid Mac Colgáin of Concept Dairy presented an analysis of the Irish milk processing sector, emphasizing the need for shareholders to thoroughly understand the deal before voting.
Kerry Group has also linked a €50 million fund to resolve a milk price dispute to the deal, a move MDPO Chair James Doyle criticized. Doyle said the payment should apply to all milk supplied, regardless of the deal’s outcome.
Diverging Views Among Stakeholders
Former Kerry Co-op board member Seamus Crawford, who recently resigned over the proposal, echoed concerns about the valuation. “Kerry Co-op is the only customer for this business,” he said.
Despite concerns, Doyle encouraged stakeholders to make an informed decision. He added that the MDPO would continue arbitration on the milk price dispute if the deal is rejected.
Voting Details
The proposal will be decided by Kerry Co-op A and B shareholders at a Special General Meeting (SGM) on Dec. 16 in Killarney, County Kerry. Approval requires a two-thirds majority of attendees, with 47% of votes held by A shareholders and 53% by B shareholders. C shareholders, who own 36.9% of the co-op, do not have voting rights.
If approved, the transaction would mark a significant shift in Ireland’s dairy sector, potentially reshaping the industry’s dynamics and Kerry Co-op’s future.
The proposal would see Kerry Co-op acquire a 70% stake in KDI for €350 million, with Kerry Group retaining the remaining 30% interest. The co-op would have the option to purchase the final stake by 2030, with full ownership transfer required by 2035.
KDI operates seven production facilities in Ireland and the UK, employs over 1,500 people, and manages consumer brands like Cheestrings and LowLow. Its forecasted revenue for 2024 is €1.3 billion.
Concerns Over Valuation
Brian Leslie, an independent financial advisor and Kerry Co-op B shareholder, criticized the €500 million valuation as “crazy,” stating his own assessment placed the company’s worth at €250 million. He argued that environmental challenges, declining milk volumes, and industry overcapacity justify a lower valuation.
Leslie warned that the proposed price would burden the co-op with debt, potentially reducing milk prices for 15 years. “A bad deal is never a good deal,” he said, urging shareholders to vote against the transaction and push for renegotiation.
Dairy Sector Implications
Diarmaid Mac Colgáin of Concept Dairy presented an analysis of the Irish milk processing sector, emphasizing the need for shareholders to thoroughly understand the deal before voting.
Kerry Group has also linked a €50 million fund to resolve a milk price dispute to the deal, a move MDPO Chair James Doyle criticized. Doyle said the payment should apply to all milk supplied, regardless of the deal’s outcome.
Diverging Views Among Stakeholders
Former Kerry Co-op board member Seamus Crawford, who recently resigned over the proposal, echoed concerns about the valuation. “Kerry Co-op is the only customer for this business,” he said.
Despite concerns, Doyle encouraged stakeholders to make an informed decision. He added that the MDPO would continue arbitration on the milk price dispute if the deal is rejected.
Voting Details
The proposal will be decided by Kerry Co-op A and B shareholders at a Special General Meeting (SGM) on Dec. 16 in Killarney, County Kerry. Approval requires a two-thirds majority of attendees, with 47% of votes held by A shareholders and 53% by B shareholders. C shareholders, who own 36.9% of the co-op, do not have voting rights.
If approved, the transaction would mark a significant shift in Ireland’s dairy sector, potentially reshaping the industry’s dynamics and Kerry Co-op’s future.
