Newmarket board turns own €23m offer from Kerry Group
Published 08/03/2010 | 07:56
KERRY Group’s initial offer of close to €23m for the acquisition of Newmarket Co-op has been rejected. The offer was turned down by the 25-person Newmarket board last week but further negotiations are now taking place.
One source close to the negotiations said Kerry expected the first offer to be rejected. “This is just brinkmanship. Those looking at the bigger picture believe a deal is in the best interest of everyone involved,” said the source.
“There is a long road ahead. This is only the first stage.” If Kerry was to acquire Newmarket Co-op, it would get a state-of-the-art cheese processing plant, as well as specialised cheese-making expertise.
Major While Kerry is considered a major player in the retail cheese market, it does not have a cheese plant in Ireland.
When Kerry acquired Breeo Foods from Reox Holdings (Dairygold) in 2009, it added the Mitchelstown and Calvita brands to its existing stable of Cheesestrings, Low Low, Charleville and EasiSingles. Charleville cheese is the biggest cheese brand in Ireland.
At Kerry Group's results last month, chief executive Stan McCarthy said the Irish cheese market fell slightly both in volume and value, but the Charleville brand maintained its status as the number one cheese brand in the market.
In 2009, the Newmarket Coop invested in the completion of its cheese plant. The plant is said to be extremely efficient in terms of management and costs, and has the capacity to produce over 30,000 tonnes of cheese per year.
However, the co-op is considered vulnerable as 80pc of its shareholders do not supply milk. Newmarket has 680 shareholders, of which about 150 supply the co-op's eight million gallon milk pool – therefore 530, or almost 80pc, are ‘dry' shareholders.
A 75pc majority would be required to approve any offer for the shares by Kerry Co-op or Kerry Group plc. Meanwhile, Kerry is also believed to be in negotiations with western milk processor Arrabawn, concerning the possible sale of its liquid milk business in Galway.
A spokesman for Kerry would not comment. It is understood talks are ongoing between the milk processors regarding the sale of the Dawn Dairies facility in Renmore, Co Galway.
The Kerry subsidiary has three processing plants – the others are in Limerick and Killarney, Co Kerry – but any deal with Arrabawn would be limited to the purchase of the Galway plant.
Arrabawn recently secured a deal with Aldi to supply milk to 10 of the discounter's outlets in the west.