Kerry Co-op shareholders fear DuPont deal may hit share value

Edmond Scanlon, the CEO of Kerry Group
Edmond Scanlon, the CEO of Kerry Group
Claire Fox

Claire Fox

Kerry Co-op shareholders have "deep concerns" that a potential Kerry Group takeover of a US nutrition business could have major implications on the value of their shares in the event Kerry Co-op shareholders were allowed to spin out their shares in Kerry Group.

Last week it emerged that Kerry Group was linked to a possible €18bn deal to buy US chemicals giant DuPont's nutrition business.

While Kerry Group CEO Edmond Scanlon did not specifically refer to DuPont he said it "would be prepared to go to shareholders for support in the event of a strategic opportunity that would generate shareholder value".

However, a faction of Kerry Co-op shareholders who have a significant stake in Kerry Group Plc have expressed "deep concerns" that if shares are used to purchase DuPont this could have implications on the value of their shares.

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Serious differences have emerged in recent years between the Kerry Co-op board and a section of its shareholders, some of whom are represented by the Kerry Co-op Shareholders Alliance.

In recent years Alliance members wanted sell the co-op's stake in Kerry Group Plc and share the dividends among co-op shareholders.

In the summer Kerry Co-op passed a motion that removed the rule restriction on Kerry Co-op to have at least a 10pc shareholding in the Plc. It also introduced a cash for shares redemption scheme that allowed members access their shares. However, Kerry Co-op Shareholders Alliance said the scheme to spin out shares wasn't tax efficient.

One source stated that if Kerry Group uses half of its shares to fund a possible takeover of DuPont, the Kerry Co-op shareholding could decrease to as low as 8pc.

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Shareholders fear that if their shareholding was to fall below the 5pc mark it would mean that if Kerry Co-op wanted to release its shares in the Plc to farmer shareholders, they would have to pay 33pc Capital Gains Tax, as well as Income Tax of over 50pc.

"If it could decrease to 8pc, what's to stop it decreasing to 6pc or below 5pc? This is a very serious issue.

"If our shares go below 5pc they would be worthless and Revenue would be the only winners," said Listowel dairy farmer Dave Scannell, a member of the Alliance.

Protest

Meanwhile, a group of farmers protested at Kerry Group headquarters in Tralee last week as they said it has been nearly two months since an arbitrator ruled that a West Cork milk price must be included in any comparison of a leading milk price.

This followed a protest of 20 farmers at the offices the previous week.

Protests are also expected to take place this week.

Kerry Group is due to meet the Kerry Co-op Leading Milk price committee on Thursday to discuss the ongoing leading milk price dispute.

A Kerry Group spokesperson stated that it has begun a review of the calculations of the 2015 milk price and that the "review to date indicates no adjustment to the 2015 Kerry milk price payment".

It added that to determine milk price on a 'like-for-like basis' subsidisation by other co-op revenues outside milk must be taken in to account.

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