The biggest future challenge facing the proposed Kerry dairy deal will be milk price, according to the chair of the Irish Farmers’ Association (IFA) in Kerry, Jason Fleming.
The €500 million deal would see Kerry Co-op initially take a 70% stake in Kerry Group’s dairy business, Kerry Dairy Ireland (€350 million), with the plc retaining a 30% interest.
The remaining portion of Kerry Dairy Ireland will have to be transferred to Kerry Co-op by 2035.
On Monday (December 16), 82% out of 2,392 Kerry co-op shareholders present at a Special General Meeting (SGM) in Killarney voted in favour of the proposal.
They also approved a share exchange programme with Kerry Group which will deliver around €1.4 billion of value (85% of shares) directly back to co-op members.
The remaining 15% (€250 million) of shares will be retained by Kerry Co-op to part fund the purchase of the dairy assets.
Kerry Dairy Ireland processes over 1.1 billion litres of milk annually from 2,740 family farms across Munster.
It has seven production facilities across Ireland and the UK and has a range of well-known consumer brands such as Cheestrings, EasiSingles, LowLow, Dairygold spread and Charleville.
The business, which has a forecasted revenue of €1.3 billion for 2024, employs over 1,500 people and operates 31 agri-services stores across Kerry, Limerick, Clare and north Cork.
Shareholders in Kerry Group will be asked to vote on the deal at an Emergency General Meeting (EGM) at the Rose Hotel, Tralee, Co. Kerry, at 2:00p.m tomorrow (Thursday, December 19).
If the deal is cleared by Kerry Group shareholders, both parties hope to have the first phase of the transaction completed by the end of January 2025.
Milk price
Kerry IFA chair Jason Fleming told Agriland that Kerry Co-op shareholders at this week’s meeting voted overwhelmingly in favour of the deal.
He noted that “a lot of questions” had been raised in advance by shareholders and milk suppliers around the whole deal.
Fleming said that going forward the biggest challenge facing the new board of Kerry Dairy Ireland will be around milk price.
He said that Kerry Co-op told information meetings that no milk supplier would leave the new entity because they will be getting a higher milk price somewhere else.
“We will be holding them to that, that there will be a proper price for milk. There are a lot of suppliers out there with a lot of borrowings,” Fleming said.
The Kerry IFA chair said that another issue highlighted during information meetings was the need for representation on the new board for Kerry Co-op B and C shareholders who will be contributing €170 million in shares towards the deal.
Fleming said that this issue, which would require a change in the co-op rulebook, should be looked at into the future.
Speaking with Agriland following the result of the vote, Kerry Co-op chair James Tangney said that the deal will be “transformational for Kerry Co-op” and satisfies “the diverse aspirations” of the vast majority of its members.
Now the work really starts in delivering a good milk price for milk suppliers going forward because they will get their shares regardless, but going forward it’s all about the business and growing the business.
“I’m delighted for all the farmers and all the milk suppliers in Kerry that we can go forward together, united, because united we can build bridges. That is a huge thing for us going forward,” he said.