The proposed Kerry Dairy Ireland joint venture by Kerry Group plc and Kerry Co-op has been notified to the Competition and Consumer Protection Commission (CCPC).
Kerry Group yesterday (Tuesday, November 12) confirmed that it has entered into an agreement with Kerry Co-op to sell its dairy division, known as Kerry Dairy Ireland, to the co-op for a total expected of price of €500 million.
Under the proposed sale, Kerry Co-op will initially acquire a 70% interest in Kerry Dairy Ireland for €350 million, while Kerry Group will retain a 30% interest.
The co-op will then have a call option to acquire the final 30% stake at any time from completion of the initial acquisition until July 31, 2030.
CCPC
The CCPC has confirmed that it was notified yesterday of the proposed acquisition of joint control of Kerry Dairy Holdings (Ireland) Limited by Kerry Co-Operative Creameries Limited and Kerry plc.
It noted that Kerry Co-Op is an agricultural society whose members are active in the supply of milk.
The CCPC added that Kerry plc is currently structured into two operating segments: Taste and Nutrition and Kerry Dairy Holdings (Ireland) Limited.
The notification states that Dairy Ireland is “active in milk processing, dairy and nutritional technology advancement and product innovation” and provides dairy ingredients and consumer products.
The competition watchdog said that it will accept submissions from third parties on the proposed transaction until Tuesday, November 26, 2024.
Kerry Dairy Ireland
Kerry Dairy Ireland processes over 1.1 billion litres of milk annually from 2,740 family farms across Munster in six dairy manufacturing facilities across Ireland and the UK.
The business operates 31 agri-services stores across Kerry, Limerick, Clare and north Cork, as well as a feed mill in Kerry.
It has a range of well-known consumer brands such as Cheestrings, Dairygold, EasiSingles, LowLow, Kerrymaid and Charleville.
Both Kerry Group and Kerry Co-op are hoping to have the first phase of the deal completed by the end of January 2025.
However, this will all depend on the approval of both Kerry Group and Kerry Co-op shareholders.
Joint venture
The co-op currently holds an 11% shareholding in Kerry Group with a value of around €1.7 billion.
The proposed deal would require a share exchange and an associated redemption process whereby the co-op shares acquired by Kerry Group plc will be redeemed and the co-op will cease to be a shareholder in Kerry Group.
The exchange would see 85% of co-op shares being converted into Kerry plc shares at the rate of 6.25 plc shares for every one co-op share held.
The co-op said that this would release the value of around €1.4 billion worth of Kerry plc
shares directly to members to hold or sell at a time of their choosing.
15% of the co-op shares, which would be worth an estimated €250-260 million, will be used to buy Kerry Dairy Ireland.
The co-op will fund the balance of the initial €350 million through loans from third party banks and Kerry Group.
A Special General Meeting (SGM) to allow Kerry Co-op shareholders to vote on the proposal will take place at 12:00p.m on Monday, December 16, 2024 at the Gleneagle INEC Arena, Killarney, Co. Kerry.
Ahead of the SGM, the co-op will be hosting a series of information events for all shareholders at venues in Kerry, Limerick, Cork and Clare.
An extraordinary general meeting (EGM) of Kerry Group is expected to take place on Thursday, December 19, 2024 to allow its shareholders to vote on the proposed transaction.