The board of Kerry Co-op met on Friday last week to hear the first details of a historic proposal between Kerry Group and Kerry Co-op over the future relationship between the two sides. The Irish Farmers Journal understands the meeting lasted just two hours as per HSE guidelines.

Board members of the co-op were given a brief introduction to the joint venture deal currently being negotiated between Kerry Group and Kerry Co-op, as well as an update by advisers PWC on the valuation of Kerry Group’s primary dairy business.

As previously revealed by the Irish Farmers Journal, negotiations between Kerry Group and Kerry Co-op are at an advanced stage.

Kerry Co-op will be liquidated and €2.4bn worth of shares in Kerry Group plc will be spun out to shareholders

Under the proposal being drawn up, Kerry Group will offer milk supplier shareholders in Kerry Co-op the opportunity to buy a 60% majority stake in Kerry Group’s primary dairy business, which has an annual turnover of €1.2bn and makes profits of €80m to €100m per year.

Additionally, Kerry Co-op will be liquidated and €2.4bn worth of shares in Kerry Group plc will be spun out to shareholders as part of a capital gains tax scheme.

While Kerry Group is understood to be anxious to wrap this deal up by the end of its 2020 financial year, reaching an agreement will be a slow process over the coming months given the fractured nature of the board of Kerry Co-op.

While most on the co-op board are eager for this deal to go ahead, there are some on the board who feel that Kerry milk suppliers have not been properly compensated following the ruling on the leading milk price issue and would like to go back to arbitration.