milk suppliers await update on Kerry Co-op joint venture

CLARE milk suppliers will be waiting to see if there any new developments concerning a proposed joint venture between Kerry Co-op and Kerry Group.

Negotiations concerning this joint venture were due be discussed at a Kerry Coop board meeting on Friday.

A few years ago, dispute broke out between Kerry Co-op and Kerry Group over milk price. Kerry Co-op took an arbitration case against Kerry Group over the price Kerry Group was paying farmers for milk.

The arbitration case dragged on for years, it was extremely drawn out and eventually the arbitrator gave a ruling for the co-op and Kerry Group to come to an agreement between themselves over the price of milk, if this wasn’t possible then they could come back to him.

After the arbitration case, Kerry Group put their dairy business up for sale. This will include their Newmarket, Listowel and Charleville milk plants.

According to Listowel dairy farmer, Dave Scannell, the dairy business has a milk pool of 1.2 billion litres and is turning over €1.2bn a year and has €80 to €100 million of profits each year.

Kerry Group are offering Kerry Coop first refusal on the milk business.

In a statement issue to the Clare Champion, he said Kerry Coop are in negotiations with Kerry Group to buy a 60% stake in the dairy business, which is thought to be worth in the region of €700 million, the 60% stake Kerry Coop are in negotiations to buy is worth €420 million but Kerry Group are thought to be willing to sell it to Kerry Coop at a knock down price of €300 million.

“In order to fund the joint venture where Kerry Coop would be buying a 60% stake in Kerry Groups dairy business Kerry Coop would be selling €200 million worth of their shares in Kerry Group to pay for the JV.

“The remaining €100 million would be paid for out of farmers milk cheques over approximately a decade. Kerry Coop will be selling approximately 8% of its shareholding in Kerry Group to fund the JV. This may prove to be a bitter pill to swallow for shareholders as currently as things stand each share in Kerry Coop is worth 6.12 Kerry Group PLC shares.”

A spokesman for the Kerry Group confirmed it has been engaging with Kerry Coop in relation to future arrangements with milk suppliers before adding the group doesn’t comment on speculation about their transactions.

A spokesman for Kerry Coop said it would not comment on speculation.

Dan Danaher