Kerry Alliance won't settle for less than full spin-out
Members of the Kerry Co-op Shareholders Alliance have slammed a proposal believed to have been put forward by the co-op board for a partial spin-out of its €2.2bn stake in Kerry Group.
It is understood that the board of the co-op, which has a 13.7pc stake in Kerry Group, is taking advice from tax experts to find a way to undertake a partial share spin-out.
The move by the board comes as serious differences have emerged in recent months between the Kerry Co-op board and a section of its shareholders, some of whom are represented by the Alliance.
Alliance members want to sell their remaining 13.7pc stake in Kerry Group PLC, and share the dividends, worth on average around €165,000, among co-op shareholders.
Alliance leader Donal Counihan said the group wants a full spin-out of shares and wants to set up a new representative structure for active milk suppliers.
"Our strategy has always been to liquidate Kerry Co-op and form a new representative co-op for milk suppliers. We are clear on what we want and we won't settle for anything less," Mr Counihan told the Farming Independent.
Alliance member David Scannell, a dairy farmer based in Listowel, Co Kerry added: "A partial spin-out is not good enough. We want nothing less than a 95pc spin-out."
A well-placed source also said that shareholders are concerned about tax implications around a partial spin-out.
A partial spin-out means members would be subject to high income tax rates, whereas a full spin-out of shares would be subject to the lesser Capital Gains Tax rate and shareholders would be able to write the tax off against other losses.
A board meeting in December is set to decide whether to proceed with a possible purchase by the co-op of Kerry Group's agribusiness section.
This option will run out on January 1 and is seen as an alternative to a share spin out.
Sources believe that the board is not likely to proceed with the acquisition and that there is now recognition at board level of the desire among members to cash in on shares.
In the summer, Kerry Co-op sent out a consultative document to gauge where farmer shareholders saw the co-op's future what it should do with its 13.7pc stake in Kerry Group.
Of the 1,500 surveys returned, 29pc of farming members favoured a spin-out and 95pc were against purchasing the agri-business unit.
Farming Independent contacted Kerry Co-op for a comment on the proposal to partially spin out shares but it did not reply.
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