DEAR KERRY CO-OP SHAREHOLDER

The Co-op board’s credibility is in tatters, the reputational damage done to Kerry Co-op is massive.

This board is dysfunctional, massively divided, incompetent and is lacking skills for larger business endeavours and critically, is not representing its shareholders.

I believe leadership must now take responsibility and be held accountable.

The chair and CEO lead an organisation overseeing shareholders’ assets of €2.5bn and were hell bent on marching into a deal, without shareholder approval, that I believe could have disastrous consequences for both milk suppliers and all co-op shareholders.

Anybody with even a modest understanding of the business could see from the very start, this deal would not be in the interest of milk suppliers and co-op shareholders because, I believe:

  • 1. The ridiculous high valuation of over €800m.
  • 2. The massive debt required to then fund this deal.
  • 3. The key dairy ingredients would be sold only to Kerry plc for a period of time.
  • 4. Kerry plc could then pay a very low price for these ingredients.
  • 5. An aging and low-margin business requiring significant reinvestment.

    • The board’s stated objective initially for pursuing this deal was to pay “a leading milk price”. This quickly seemed to evolve, when even a “blind man” could see this was not remotely possible, to then “being in control of one’s destiny”.

    Under the current leadership, this board has failed in its duties to:

  • A. Represent its shareholders.
  • B. Add value and protect shareholder funds.
  • C. Allow shareholders vote.
  • D. Complete the milk price arbitration case.

    • We know under this leadership this board has:

  • 1. Spent over €1m plus on professional fees associated with this deal.
  • 2. Then, appeared to ignore some of this professional advice.
  • 3. The board was only furnished critical information very late in the deal process.

    • I believe Kerry plc pulled back from this deal because it became public how one-sided this deal was and the negative coverage in the media.

    Time will now call out Kerry plc’s bluff. If there are other interested parties, then a deal will surely be concluded within months.

    I think not, and this is just another example of the plc taking advantage of this ‘gullible’ co-op board.

    After 18 months of negotiations with the plc, the leaked “Legal Transaction Overview” outlined the terms of this deal which I believe could have been disastrous for all.

    Following the collapse of this deal, if any further proof was needed that new leadership is required, the co-op showed once again how out of touch they are. They issued their first public statement after all this time, outlining how their focus was on “protecting” and “delivering for all its stakeholders” and believed “a fair valuation” was offered and now want to pursue other “opportunities”.

    Rule changes are clearly required, the appointment of external directors with real business experience is essential, but only after a new chair and CEO are appointed.