Kerry Co-op is to put a proposal to the Revenue Commissioners that could clear the way for its members to benefit from a partial spin out of its €2.2bn stake in Kerry Group.
The board of the co-op - which holds a 13.7pc stake in the food giant - is taking advice from tax experts to find a way to undertake a partial share spin out, according to well-placed sources.
But the move comes against the backdrop of a row over the future of the co-op. There is discontent among many shareholders that they cannot cash in on share pots that average €165,000 per member, and many non-farming shareholders were unhappy to have been excluded from a recent consultation of members by the co-op board about how it should use its resources, said sources.
More than half of Kerry Co-op members now are not involved in farming, and this has complicated the tax situation if Kerry Co-op shares are converted into more liquid - and extremely lucrative - Kerry Group shares.
So-called C-class co-op shareholders - who tend to not have farming interests - were not included in a recent consultation survey that was distributed among the mainly farming-linked A- and B-class shareholders. C-class shares do not have voting rights for board proposals on the co-op's future.
Some farming and milk supplier interests - who account for 3,300 of the co-op's 13,500 shareholders - are understood not to favour a share spin out because they fear it will break a long-standing link with Kerry Group, on which they rely for a good milk price.
A board meeting in December is set to decide whether or not to proceed with a proposed takeover by the co-op of Kerry Group's agribusiness unit - a long-standing option which runs out on January 1 and is seen as an alternative to a share spin out.
Sources believe the board is likely not to proceed with the acquisition and that there is now recognition at board level of the desire among members to cash in on shares.
Of the 1,500 consultation surveys returned, 29pc of farming members favoured a spin out and 95pc were against purchasing the agribusiness unit.
Well-informed sources said non-farming members were angry that they were not consulted. but many of them would likely favour a full spin out of the shares.
This would be more tax efficient because they would pay capital gains tax rather than income tax and therefore could write tax off against other losses.