The chair of Kerry Co-op has said he is “delighted” that shareholders have backed a plan to buy Kerry Group’s dairy division, Kerry Dairy Ireland for €500 million.
However, James Tangney has acknowledged that the work is really now beginning as the Kerry Co-op board seeks to unite milk suppliers.
82% of eligible co-op shareholders present at a Special General Meeting (SGM) held today (Monday, December 16) in Killarney, Co. Kerry voted in favour of the proposal to acquire Kerry Dairy Ireland.
They also approved a share exchange programme with Kerry Group which will deliver around €1.4 billion of value (85% of shares) directly to co-op members.
The remaining 15% (€250 million) of shares will be retained by Kerry Co-op to fund the purchase of the dairy assets.
Kerry Co-op
Speaking with Agriland following the result of the vote, James Tangney said that the acceptance by shareholders of the deal begins a journey that will ultimately lead to the full ownership of “one of the leading dairy businesses in the country”.
He said that the transaction will be “transformational for Kerry Co-op” and satisfies “the diverse aspirations” of the vast majority of its members.
“It’s a big day for shareholders and milk suppliers to Kerry Group. The result was excellent.
“Going forward we look forward to growing this business for milk suppliers. The vote is passed now, we’ll move on.
“Now the work really starts in delivering a good milk price for milk suppliers going forward because they will get their shares regardless, but going forward it’s all about the business and growing the business.
“I’m delighted for all the farmers and all the milk suppliers in Kerry that we can go forward together, united, because united we can build bridges. That is a huge thing for us going forward,” he said.
Tangney said that the intention is to return the dairy business to a “co-op ethos”, adding that “there are bridges that need to be built with suppliers”.
“There are people in the room today who voted against the deal so we hope going forward to bring all those people with us,” he said.
417 out of the 2,932 shareholders present at the meeting voted against the deal.
“We hope that over the next 12 months we will put a [milk] contract in front of people and that we can build those bridges because together we can grow this business but we need all our suppliers with us.
“That would be the intention of the board to bring all suppliers with us going forward,” the Kerry Co-op chair said.
Kerry Dairy Ireland, which employs 1,500 people, processes over 1.1 billion litres of milk annually from 2,740 family farms across Munster.
The business has a range of well-known consumer brands, along with seven production facilities across Ireland and the UK and 31 agri-services stores in Munster.
The deal would see Kerry Co-op initially take a 70% stake in Kerry Dairy Ireland (€350 million), with Kerry Group retaining a 30% interest.
The remaining portion of Kerry Dairy Ireland will have to be transferred to Kerry Co-op by 2035.
Kerry Group has also agreed to put a €50 million fund in place to resolve the ongoing dispute with suppliers over leading milk price, subject to the deal being accepted.
This would involve a cumulative payment of 5.4c/L to suppliers for the years from 2015 to 2020 as per their milk supply contract.
Kerry Group
In a statement issued this afternoon, Kerry Group said that it “welcomes the outcome of the vote by Kerry Co-Operative Creameries Limited in favour of the proposed sale of Kerry Dairy Ireland to the co-op”.
The next step for the proposed transaction is to secure the approval of the shareholders of Kerry Group.
The company will hold an Emergency General Meeting (EGM) at the Rose Hotel, Tralee, Co. Kerry, at 2:00p.m on Thursday (December 19).
If the deal also secures the green light from Kerry Group shareholders, James Tangney said that it is hoped to have the first phase of the transaction completed by the end of January 2025.
The Kerry Co-op chair is hopeful of a “seamless transition” as the current Kerry Dairy Ireland management, including chief executive Pat Murphy and his leadership team, will remain in place.
As part of the deal Kerry Dairy Ireland would have a new board structure comprising seven co-op nominees, three Kerry Group nominees, two independent non-executive directors, along with the chief executive of Kerry Dairy Ireland.
As previously reported by Agriland, the Competition and Consumer Protection Commission (CCPC) has already granted approval for the proposed deal.
The commission found that the transaction would not substantially lessen competition in any market for goods or services in the state.