Kerry Co-op deal back on the table
KERRY Co-op has revived a potential €360m deal to acquire a majority stake in Kerry Group’s legacy dairy business, the Business Post has revealed.
A previous attempt by the co-op to purchase Kerry Group’s dairy processing and consumer foods business in Ireland collapsed in April 2021.
The Leader contacted Sean Lavery, Limerick IFA chairman, and the ICMSA seeking their reaction to negotiations restarting over a potential joint venture.
“Limerick farmers are both interested and concerned that negotiations have re-commenced. They are interested because such a change in who they sell their milk will have an economic impact in that their future milk price will now have to pay for borrowings to fund the joint venture.
The cost of those borrowing has increased significantly in the last 12 months, this therefore could impact milk price,” said Mr Lavery, who added that farmers in Limerick and across the country are concerned that previously mentioned valuations of the joint venture appeared much larger when compared to the recent Glanbia deal.
“They most certainly felt that on a per litre processed basis the cost of the joint venture was much more expensive by comparison with the Glanbia/Tirlan deal. If that continues to be the case farmer shareholders will need to be well convinced as to why they should pay more by comparison.
“Farmers are also concerned that the new structures needed to run the joint venture will be fit for purpose and one that they can have confidence in,” said Mr Lavery, who added that IFA have arranged a meeting with the co-op in the near future.
The chairperson of ICMSA’s dairy committee, Noel Murphy, said the association would not comment on speculation and would await developments and a formal proposal before setting out its position on the possible purchase of the milk processing business from the PLC.
But Mr Murphy, himself a Kerry supplier, said that ICMSA would be “seeking categoric assurances around the terms and conditions of future milk supplies in the event of any transfer”.
“ICMSA’s business is ensuring that the highest possible milk price is paid to milk suppliers. That is the foundation of our association, and it will continue to be our focus regardless of whatever entity is processing the milk supplied by our farmer-members,” said Mr Murphy.