On Thursday morning, Kerry Group plc announced that phase one of the sale of Kerry Dairy Ireland to Kerry Co-op was completed on 31 December and there is some good news for the co-op in the timing.

The announcement of the completion allows shareholders in the co-op to get a final value on the amount of debt which will be taken on as part of the transaction.

This is because while the number of shares which would be used to fund a significant part of the purchase has long been known, the value of those shares could not be calculated until the transaction was completed.

The balance of the €350m due in the first phase would be made up from bank debt and a loan from Kerry Group.

Terms

Under the terms of the deal, that share value would be calculated “by the volume-weighted average share price of a Kerry Share traded on Euronext Dublin (measured over ten business days prior to Phase 1 completion)”.

If we take the completion date as 31 December, then the value of the shares will be the volume-weighted average value of shares traded between 13 December and 30 December – the 10 business days immediately preceding the completion.

According to Irish Farmers Journal calculations, that value comes out at €91.793 per Kerry share.

There are 2,858,372 shares being used for the purchase, which means the total value of those shares, as per the agreement, is €262,378,502.

This figure is more than €14m higher than the numbers outlined at the time the proposal was put to Kerry Group shareholders.

It means that the loan from Kerry Group to Kerry Co-op towards funding the €350m total will be approximately €31.6m, rather than the €46m originally outlined (see Table 1).

This is obviously good news for Kerry Co-op, as it will mean lower overall debt and slightly lower interest costs for the processor as it starts life under new ownership.