Row over Kerry Co-op shares escalating as shares in Kerry Group break €100 barrier
A row between shareholders in Kerry Co-op is escalating as share price of Kerry Group plc broke through the €100 barrier for the first time in its history this month with the company now valued at just over €18bn.
Shares in the company are up almost 20pc since the start of the year on the back of volume growth across each of the regions it operates in, with particularly strong growth of 9.3pc coming from the Asia, Pacific, Middle East, and Africa region, which was led by China.
In its latest trading update the company said it made a "solid" start to 2019, with reported revenue up 10.3pc in the three months to 31 March.
However, there were angry scenes at a meeting of Kerry Co-op shareholders in Limerick on Monday night with frustration over a proposed cash for shares scheme boiling over amid calls for the co-op to be wound down.
Serious differences have emerged in recent months between the Kerry Co-op board and a significant number of its shareholders, some of whom are represented by the Kerry Co-op Shareholders 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.
Meanwhile, the co-op board has approved and recommended an equity redemption scheme for members which would offer shareholders the opportunity to sell some or all of their shares.
Members can avail of the offer until June 5 but the scheme will have to be approved at Kerry Co-op's upcoming AGM on June 19.
Alliance members are stridently opposed to the board's cash for shares proposal as, they say, it could result in potentially massive tax bills.
On Monday night over 400 shareholders attended a meeting at the Southcourt hotel in Limerick to discuss the impasse.
At the meeting several shareholders called for the Co-op to be wound down. Calls were made that a vote to liquidate the Co-op be scheduled for the AGM should the shares scheme be rejected at the meeting in Tralee's Brandon Conference Centre.
The meeting was jointly organised by Listowel farmer Dave Scannell who told the Kerryman there is palpable anger among shareholders.
Mr Scannell claimed that if the cash for shares scheme comes into play the inheritance tax valuation put on shares would double from €300 to approximately €600.
According to Mr Scannell and the Alliance anyone who takes part in the scheme would face income tax, PRSI and USC of up to 55pc and no allowances will be made for any inheritance tax already paid.
"The scheme being proposed is of absolutely no use to the vast majority of shareholders," Mr Scannell said.
"The cash for shares scheme is going to be suitable to only about 50 shareholders, the other 13,450 will be facing penal double taxation. Anyone who bought these shares in the last few years will be facing total wipe out of their investment," said Mr Scannell.
"The entire tone of the meeting was one of anger that the shareholders felt over the board ever proposing a scheme which would lead to such outlandishly penal tax rates," he said.
"It was abundantly clear to anyone at the meeting that the relationship between shareholders and the board has broken down," he added.
Kerry Co-op have argued that "no two people have the same tax situation" and that the scheme will benefit those on the lower tax rate.
The board have also said that as the shares are 'locked in' there is no other option for discharging them except via the proposed scheme. A second meeting on the matter was due to take place at the Ballyroe Heights Hotel on Tuesday night.
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