Kerry Group has reached an agreement with the board of Kerry Co-op on a proposal for a joint venture for the group’s Irish dairy operation.

The Irish Farmers Journal understands that the new entity will be 70% owned by Kerry Co-op and 30% owned by Kerry Group.

Kerry Co-op will pay an initial €350m as part of the deal, with another €150m to be paid in five years’ time, possibly to buy out the remainder of Kerry Group’s share in the operation.

Kerry Group is said to be due a guaranteed annual dividend of €8m per year from the joint venture.

While some of the details of the deal remain unclear, any joint-venture agreement would have to be passed by members of Kerry Co-op.

Arbitration

At the last annual general meeting (AGM) of the co-op, the chair said that the long-running arbitration dispute would be resolved ahead of any agreement on the future direction for the co-op.

It now seems that the arbitration resolution has been tied into the deal with Kerry Group.

The joint-venture deal would see a payment of 5c/l made to farmers in settlement of the issue. Suppliers were told at the AGM that the balance owed was 7.39c/l plus interest.

The proposal for a joint-venture will have to be put to shareholders of Kerry Co-op for approval, which the Irish Farmers Journal understands will be held before Christmas.

A spokesperson for Kerry Group declined to comment when contacted by the Irish Farmers Journal.