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Independent.ie

Tuesday 6 December 2016

Dates now set for crucial votes on Kerry Co-op shareholding

Declan O'Brien

Published 05/07/2011 | 05:00

The proposed rule change would allow the Kerry Co-op's shareholding in
the plc to fall below the current 20pc threshold
The proposed rule change would allow the Kerry Co-op's shareholding in the plc to fall below the current 20pc threshold

The dates have been set for two crucial votes by Kerry suppliers on a proposed rule change which would allow Kerry Co-op's shareholding in Kerry Group plc to be cut significantly.

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The co-op board has signalled its intention to divest a quarter of its shareholding in the Kerry Group plc if the vote is carried.

This would involve a share exchange with the plc worth €290m to the co-op's 12,500 A, B and C shareholders.

The first of the special general meetings is set for the Brandon Hotel, Tralee, on Wednesday, July 20, with the second ballot at the same venue on Tuesday, August 16.

The proposed rule change would allow the co-op's shareholding in the plc to fall below the current 20pc threshold.

At the moment the Kerry Co-op's stake in the Kerry Group plc is 22.8pc and cannot drop below 20pc. However, the proposal would see this threshold deleted and a new threshold of 10pc plus one share introduced.

In order for the vote to be carried it needs 75pc support from the Kerry's 4,400 milk suppliers, which are classed as A shareholders in the co-op.

It is also being proposed that any new move to cut the co-op's shareholding in the plc below the 10pc threshold should simply require a majority of the co-op's A and B shareholders.

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As part of the share exchange plan from the co-op board, a quarter of the co-op's shareholding in Kerry Group plc would be transferred to the co-op's shareholders.

Co-op shares would be converted at a rate of 6.66 co-op shares to one plc share. In all, 10m plc shares with a value of €290m (at today's Kerry Group share price of €29) would be transferred. This would reduce the co-op's shareholding in the plc from 22.8pc to 17.1pc.

For co-op shareholders, it would mean 25pc of their shareholding in the co-op being converted into a plc shareholding, which they could then sell or hold.

In a further possible change at Kerry, it has been proposed that co-op representation on the Kerry Group plc board would be cut from seven to four.

This is to be voted on at a further special general meeting in September. It will require a two-thirds majority of A and B co-op shareholders to be passed.

Opinions differ on the level of support and opposition for the proposals. It has been suggested that there is some concern among milk suppliers at the reduction in plc board representation and at the cut in the co-op's shareholding in Kerry Group.

One Co Kerry supplier pointed out that the 75pc support needed was a tough hurdle and that a lot would depend on how farmers viewed the supplier contracts which were recently published by Kerry Group. This deal guarantees that suppliers will be allowed to supply 120pc of their existing quota when quotas are abolished in 2015.

A former Golden Vale supplier from Limerick predicted that the turnout from Limerick and Clare could be small and that the vote would be decided in Kerry.

Another Kerry farmer predicted that each of the votes would be passed with the required majority. He pointed out that there was more vocal opposition to the move to take the co-op shareholding below 50pc in 1996 and it was still carried comfortably.

"In a perfect scenario we'd have remained a co-op but we didn't and the business has evolved since then," he said. "You can't turn back the clock, we are where we are and we have to make the best fist of it."

A spokesman for Kerry Group plc said the proposed rule changes were entirely a matter for the co-op's shareholders.

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