On December 16 next 2,604 “A” shareholders and 2,973 “B” shareholders of Kerry Co-op will be entitled to vote on the proposed takeover of Kerry Dairy Ireland.
The 6,329 “C” shareholders will not get a vote, even if they have a significant interest in the outcome.
Under the rules of the co-op, 66% of those present and voting will have to approve the deal in order for it to be considered passed.
B shareholders (and C shareholders) are so-called “dry” shareholders who do not supply milk to Kerry Dairy Ireland.
For those shareholders the chance to get the vast majority of their share value transferred in a tax efficient way could certainly look like a good deal.
There may be some small resistance to having 15% tied up in the new dairy operation, but that is unlikely to be substantial, particularly as they would be in line for a share of dividends from the co-op and possibly even a future buyout of their stake.
For A shareholders – those supplying milk to Kerry Dairy Ireland – the vote is both for a share spinout and the future of their milk processing.
For them, the calculation may be quite different. While they will get a substantial payout from the share deal - A shareholders own around 30% of co-op shares, meaning they will get on average around €160,000 in Kerry plc shares at current prices – the farmers may be much more interested in the future of the co-op than a short-term windfall.
This is especially true of newer entrants and younger farmers who are keen to build a successful milk processing business, and often have very few, or no, co-op shares.
From talking to farmers since the deal was announced, it is clear that milk suppliers are keen to control the co-op and would rather have a deal structured so that the only shareholders left in the co-op are farmers who are supplying milk to the business.
While there seems to be little chance of the proposal not getting sufficient votes to be passed, the people who seem least happy with the proposal are the ones who, ultimately, are the most invested in it.
SHARING OPTIONS: