Acquisition option: Time ticking for Kerry Co-op

Kerry Co-op continues to mull over its option to purchase the agri-business arm of Kerry Group before the option expires at the end of January.

The co-operative – which owns 13.7% of Kerry Group, worth some €2.2 billion – has been considering the move in detail in recent months and held a consultation process last year to gauge members’ views on the future of Kerry Co-op.

A total of 307 people out of the 1,507 respondents supported buying Kerry Agribusiness in the consultation – a far cry from a majority backing. Despite this, the Kerry Co-op board is continuing to investigate the matter.

Speaking on Radio Kerry yesterday (Thursday, January 3), secretary of the co-op board Thomas Hunter McGowan outlined the organisation’s immediate plans on the option.

Evaluation

He said: “The first 90 days really is just getting the preliminary evaluation and the financial statements; the evaluation of those should take about 30 days, maybe, in doing the evaluation.

“Then getting approval from shareholders; so there’s another two or three months in that part of it.

And then, if we do go to the final part of it and we want to complete the transaction, it could be a further one to six months in order to finish it out.

“We have a duty of care to make sure that we properly evaluate the option before we make any decision on it and it’d only be on the basis of evidence that we’d make an informed decision about what we want to do with it,” McGowan said.

Opposition

Members of the Kerry Co-op Shareholders Alliance have rejected this stance, claiming the only winner from such plans will be auditing firm PWC, which will be employed to do the accounts and look at the figures.

One alliance member told AgriLand that there is no chance of the co-op board attaining the support of 67% of active or dormant milk-supplying shareholders which he said would be required to give a proposal to acquire the agri-business the green light.

The member added that there was a board meeting held on the last Friday before Christmas, at which the board voted on a proposal for a partial spin-out of co-op shares for those interested.

This was rejected by the board, the member said, as income tax would have to be paid on any shares converted.

Regarding the board’s continued pondering of the possibilities of acquiring Kerry Agribusiness, the alliance member described the stance as “insulting” given the apparent lack of member support.

“This money that is going to be paid to PWC – that doesn’t fall out of the sky; that’s the farmers’ money,” the alliance member added.

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