Kerry Co-op shareholders have today (Monday, December 16) approved the proposed €500 million purchase of Kerry Group’s dairy business, Kerry Dairy Ireland.

The historic vote at a Special General Meeting (SGM) held in the Gleneagle INEC Arena, Killarney, Co. Kerry drew a crowd of 2,392 shareholders.

There are currently 11,906 shareholders in co-op, but just 5,577 have voting rights.

Shareholders were asked to vote on the single resolution which would allow the board to proceed with the proposed transaction.

The result, announced by Kerry Co-op chair James Tangney shortly before 4:00p.m, saw 1,955 (82%) of shareholders vote in favour of the deal.

There were 417 votes against the proposal.

The deal would see Kerry Co-op initially take a 70% stake in Kerry Dairy Ireland (€350 million), with Kerry Group retaining a 30% interest.

The remaining portion of Kerry Dairy Ireland will have to be transferred to Kerry Co-op by 2035.

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.

Kerry Co-op

Kerry Co-op currently holds an 11% shareholding in Kerry Group with a value of around €1.7 billion.

In order to fund the first phase of the deal Kerry Co-op will use a share exchange programme which will see members given 85% of their shares directly in the form of Kerry Group shares, worth a total of around €1.4 million.

The remaining 15% – worth around €250 million – would be retained by the co-op to invest in the acquisition of Kerry Dairy Ireland.

The balance would be covered by €56 million in loans from banks and another loan from Kerry Group for an estimated €43 million.

Kerry Group will be entitled to a fixed dividend of €7.5 million per annum during the period of the joint ownership.

The final 30% stake in Kerry Dairy Ireland will be funded through a 1c/L contribution from milk suppliers from 2026 (€50 million), third party debt (€80 million) and forecasted accumulated cash within the business (€20 million).

Kerry Group has agreed to put a €50 million fund in place to resolve the ongoing dispute with suppliers over leading milk price, subject to the deal being accepted.

This would involve a cumulative payment of 5.4c/L to suppliers for the years from 2015 to 2020 as per their milk supply contract.

Shareholders

The start of today’s meeting had to be delayed by around 40 minutes due to heavy traffic approaching the venue.

The co-op ran bus services from across the catchment to allow shareholders to attend the meeting.

The SGM was addressed by Jim Woulfe, advisor to the Kerry Co-op board, Simon MacAllister, from EY and Ronan Macnioclais from PWC who presented an overview of the proposed deal.

A question and answer session heard some impassioned pleas from shareholders who were in favour and against the co-op proposal.

Those against the deal claimed that the valuation of Kerry Dairy Ireland by the co-op was too high.

The 2,604 A shareholders in Kerry Co-op who are, or who have been in the last five years, milk suppliers, and 2,973 B shareholders, who are former milk suppliers, were eligible to vote.

While the 6,329 C shareholders, the majority of whom became shareholders through inheritance or through commercial activity, do not have a vote under the co-op rules.

Under the co-op rules, the proposed transaction would only proceed if it was approved by the required majority (66%) of the co-op’s A and B shareholders who were present at the SGM.

Ahead of the meeting, Kerry Co-op held a series of 14 information meetings across counties Kerry, Limerick, Cork and Clare which hundreds of shareholders and milk suppliers attended.

Kerry Dairy Ireland

The proposed transaction will now require the approval of the shareholders of Kerry Group.

The company is due to hold an Emergency General Meeting (EGM) at the Rose Hotel, Tralee, Co. Kerry, at 2:00p.m on Thursday (December 19).

If the deal secures shareholder approval, both parties are hoping to have the first phase completed by the end of January 2025.

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