Kerry Group and Kerry Co-op have reached an agreement on a proposal for a joint venture for Kerry Group’s dairy division, Agriland understands.
Although there has been no formal confirmation from either side, it is believed that under the proposal 70% of the new entity would be owned by Kerry Co-op, while the remaining 30% will be owned by Kerry Group.
Agriland understands that the proposed deal would see Kerry Co-op pay Kerry Group an initial €350 million, with a further €150 million to be paid in five years’ time or before.
The proposed deal would include Kerry Group milk processing facilities in Ireland and the UK.
Kerry Group
There have been repeated calls from Kerry milk suppliers for the long-running arbitration process in relation to the leading milk price issue to be resolved prior to any proposed joint venture proceeding.
Agriland understands that this new proposed deal includes an agreement on the arbitration issue and a payment for suppliers.
The arbitration issue was raised during Kerry Co-op’s annual general meeting (AGM) earlier this year, where the co-op told shareholders that the money owed to suppliers was 7.39c/L, plus interest.
In August, the board of Kerry Co-op confirmed that it had appointed one of Ireland’s leading corporate law firms, RDJ LLP, in a bid to advance the arbitration matter.
Joint venture
As previously reported, the Kerry Co-op annual report for 2023 stated that the co-op board would outline its proposals on a future strategy to shareholders later this year.
At that time, James Tangney, who was elected as chair of Kerry Co-op last December, said that the board is “actively working on the development of strategic options for the future success of the society in the context of Kerry Group plc milk contract ending in April 2026”.
He stressed that “any fundamental decisions on future direction will be put to eligible shareholders in due course for their consideration and approval”.
Agriland understands that the proposed joint venture could be put to shareholders for their approval in a vote before Christmas.
In April 2021, joint venture talks between Kerry Group and Kerry Co-op were suspended after over 18 months of discussions; it was believed the valuation of the dairy business was among the sticking points.
Fresh negotiations between the parties on a renewed deal resumed in recent months.
Agriland has contacted Kerry Group and Kerry Co-op for comment on the proposed deal.