Kerry Co-op farmers in line for €25,000 payout
Shareholders vote to reduce stake in Kerry Group by huge 86.2pc
Published 17/08/2011 | 05:00
MORE than 4,000 farmers are set to receive a windfall worth an average of €25,000 each after overwhelmingly voting in favour of a rule change that allows Kerry Co-op's shareholding in Kerry Group Plc to drop below its current 20pc threshold.
At a second ballot in Tralee, 86.2pc of co-op shareholders voted to lower the threshold.
Yesterday's ballot, at the Dome in Tralee, was the second vote by co-op shareholders that allows for the establishment of a new threshold for the co-op of 10pc plus one share -- the minimum holding the co-op is allowed in the plc. The proposal needed the support of a majority of at least 75pc to be carried.
Out of an eligible 4,400 'A' grade shareholders -- or active milk suppliers -- 1,978 ballot papers were issued at yesterday's special general meeting.
As per the first ballot last month, a secret ballot decided if the proposal would be accepted with 1,692 voting in favour and 271 against. There was only one spoilt vote.
At the first special general meeting of shareholders in July, a majority of 78.9pc voted in favour of the proposals and there had been speculation that yesterday's vote would be even tighter.
The Kerry Group is valued at €4.9bn; and Kerry Co-op's current 22.8pc stake in it is worth approximately €1.1bn.
Co-op shares would be converted at a rate of 6.66 plc shares to one co-op share to bring down the co-op holding.
With Kerry Group's current share price of €26.55, this means that 10 million plc shares, worth over €265m, would be transferred.
The co-op's shareholding in the plc would be reduced from 22.8pc to 17.1pc and would give the milk suppliers their new Kerry Plc shares which are worth on average around €25,000.
Shareholders are due to vote on another proposal in September that will reduce the co-op's representation on the plc board from seven to four. News of the vote's passing is a fillip to Kerry Group, which is expected to report strong half-year earnings today.
NCB stockbrokers' Darren Greenfield, however, warned the consumer foods division was expected to have continued to struggle in Ireland.
"Consumer Foods (CF) is likely to have experienced a tougher Q2 as a result of pushing necessary price increases on to a weak UK and Ireland consumer.
"We would also expect slower price rises as large retailers resist the price increases. Although CF now represents less than 25pc of EBIT, a particularly cautious outlook may weigh on results," he said.
Kerry closed down 0.65pc at €26.55.