Kerry Co-op shareholders will be asked to vote on a resolution in relation to future investments at a special general meeting (SGM) this week.
The resolution would seek to cap investments made by the board of Kerry Co-op at €50 million in a five-year period.
In the case where an investment would exceed this limit, it would have to be approved by shareholders at an SGM.
If the resolution is approved and added to the co-op rulebook it would mean that large investments such as a joint venture with Kerry Group would require shareholder approval.
In April 2021, talks between Kerry Co-op and Kerry Group on a potential dairy business deal were suspended after over 18 months of discussions.
Kerry Co-op is the largest shareholder in Kerry Group with an 11.4% stake in the company worth around €2 billion.
Kerry Co-op
According to the Kerry Co-op Annual Report 2022, the co-op recorded a profit after tax of €8.2 million for the financial year ended December 31, 2022.
This is down from €10.8 million in the previous year.
The total compensation for directors and directors who resigned in 2021 amounted to €509,050 for the financial year, up from €372,700 in 2021.
The board has recommended the payment of share interest of €4.50/share on all shares held on June 23, 2023.
In 2022, Kerry Co-op completed two rounds of its share redemption scheme with a price of around €544 per co-op share achieved.
On the grey market, the average price per co-op share was €514.
Resolution
Last November, a group of shareholders submitted around 1,200 shareholder signatures calling for an SGM to take place.
The group wants a conversion rate for their shares of one to 5.9 plc shares to be added to the co-op’s rulebook.
The shareholders are concerned that co-op funds will be substantially reduced to pay for a joint venture with Kerry Group while shareholders with no interest in milk processing will see their value in the co-op reduced.
The annual report outlines that both the Irish Co-Operative Organisation Society (ICOS) and legal advice warned against prescribing a fixed determination or valuation ratio terms to the future sale price of co-op shares.
The board said that it is confident that the resolution to be tabled at this week’s SGM will “best address the future fair value concern by limiting the co-op’s spend over a five-year rolling timeframe”.
“The resolution has been developed to address legitimate concerns expressed by numerous shareholders,” Denis Carroll, chair of the Kerry Co-op board, said.
“Any fundamental decisions on future direction will be put to eligible shareholders in due course for their consideration and approval,” he said.
Shareholders
The resolution, which will require a two-thirds majority to pass, will be voted on at an SGM which will immediately follow Kerry Co-op’s annual general meeting (AGM) on Wednesday (July 5) in the Kerry Sports academy in Tralee, Co. Kerry.
In April, the board appointed former Dairygold chief executive, Jim Woulfe as “an independent external advisor”.
Along with having a “strong look” at the structure of the co-op, Woulfe will help the board to develop its future strategy.
“I expect that we will be in a position towards mid to late autumn to outline our future strategy plans to our advisory committees and membership and to proceed from there to putting forward our proposals in due course for shareholder consideration.
“Ultimately, we wish to ensure that future strategy will fairly benefit all our shareholding members,” Denis Carroll said.
Agriland also understands that the long-running arbitration process between Kerry Co-op and Kerry Group in relation to the ongoing leading milk price issue will be discussed during this week’s AGM.
The issue was among those highlighted by up to 500 Kerry Group milk suppliers during their recent protest in Charleville.