The board of Kerry Co-op is set to plough ahead with the process of buying the milk processing division of Kerry Group – with a formal bid imminent, Agriland understands.
It is believed that the co-op board will make a bid worth in the region of €605 million for the purchase of the division from the food giant.
However, Agriland understands that the decision was made by the board without giving the co-op’s shareholders a chance to vote on the move.
This is believed to have raised concerns among a number of co-op members.
The decision was taken at a meeting of the board this week – with the bid to be made over the coming days, possibly as soon as today (Friday, April 9).
This is the latest move in the process of a joint venture, known as “Project Seafield”.
In an advisory document seen by Agriland, which focuses on key legal exposures that may be present in such a transaction, it is noted that the first step of this proposal would be the purchase by the co-op of 60% of the new entity formed by the joint venture.
In three years’ time at the option of the co-op, or five years’ time at the option of Kerry Group, Kerry Co-op would then buy the remaining 40% for cash at the original bid value, plus interest, the proposal says.
The document notes that both organisations would have to sign an agreement regulating the ownership and governance of the new entity for as long as Kerry Group retains its 40% share.
It is noted that the proposed deal would include five manufacturing facilities, the feed mill and 29 agri-stores, as well as the staff. The position on management remains to be confirmed, however.
The name “Kerry” will not move with business, but trading names such as Charleville, Dairygold and Pure will.
More to follow.