Board of Kerry Co-op ‘lambasted’ at AGM

The board of Kerry Co-op was reportedly put under significant pressure from shareholders to spin out their shares in Kerry Group, which represent an estimated value of €2.2 billion.

Some shareholders in the co-op voiced their displeasure with the board at the co-op’s annual general meeting (AGM), which took place in Tralee, Co. Kerry, on Wednesday, June 13.

The meeting was reportedly attended by almost 600 people, with representatives from the Irish Co-operative Organisation Society also present.

A statement issued by Kerry Co-op said: “There were robust exchanges on matters affecting shareholders and the chairman (Mundy Hayes) assured the meeting that the views expressed would be taken on board by the directors.

“The latest advice received from Deloitte, which is the co-operative’s tax advisor, was shared with shareholders present to make them aware of the current position in respect of any future share exchanges.

The chairman advised the meeting that the board will be communicating with all of the A and B shareholders seeking their views on the future strategic direction of the co-operative in the next few weeks.

A number of shareholders who spoke at the meeting called for a “a total spin-out” of the shares, which represent a 13.7% stake in Kerry Group.

As it stands, there are approximately 13,500 shareholders in Kerry Co-op. Meanwhile, one co-op share represents 6.12 shares in Kerry Group – which are valued at €91 each (as of close of business on June 15, 2018).

‘No confidence’

One shareholder who was at the meeting told AgriLand that the board was heavily criticised at this week’s AGM.

“They really got a lambasting. There is no confidence at all in the board; not one person spoke in favour of the board at the meeting.

“It was a militant meeting. It wouldn’t have taken much at the meeting for a mutiny to start. There was some anger there; people that never spoke in their life [at a meeting] gave it to the board,” he said.

However, a source on the board of Kerry Co-op warned that certain tax issues have to be ironed out before a spin-out of shares can take place – otherwise, it is feared that Revenue “could have a field day”.

But some shareholders believe that this is just a “smokescreen” being used by the board to delay a spin-out.

Meanwhile, a special resolution that was scheduled to be voted on at the AGM relating to the rights attached to the different types of shares was postponed.

Strategy direction of the co-op

As outlined in the statement from Kerry Co-op, stakeholders will be asked to give their views on the strategic direction the co-operative should take moving forward.

Stakeholders will be asked to give their views on two potential strategic options, which are currently understood to be under consideration by the board.

The first option outlined is to evaluate and – if it makes commercial sense – exercise the option, which has been in place for a number of years, with Kerry Group that will involve the acquisition of the Kerry Agri-Business.

Stakeholders will also be asked whether they would prefer to explore all options to work with a co-operative or milk processing company “through a merger / joint venture or other suitable structures”.

The consultation process is due to close on Friday, August 3, according to a draft letter seen by AgriLand.

This development is believed to have led to further discontent among a selection of shareholders, with some describing it as “a backward step“.

Kerry Co-op has confirmed that if an extraordinary general meeting (EGM) is necessary to deal with the special resolution, or any other issues shareholders have, the chairman will call such a meeting “at a time more conducive to farmers in October or November”.