Stock exchange files show Kerry Group plc boss Edmond Scanlon purchased €1.1m worth of shares on Thursday.
The Kerry boss obviously thinks they are value and Kerry Group is still predicting good financial numbers for the year.
The Kerry Group share price has dropped significantly since July, when it reached €130 per share.
Kerry Co-op
Interestingly, it has also emerged this week that Kerry Co-op CEO Thomas Hunter McGowan is believed to have spent over €30m of co-op funds to purchase Kerry plc shares for the co-op.
While reporting to a Kerry Co-op shareholder advisory committee meeting, the Kerry Co-op boss suggested that the co-op purchase plc shares to the tune of over €30m, instead of selling them on the open market.
To fund the balance of the scheme, a further circa €30m worth of plc shares were sold on the market at €109 each per plc share.
How it works
At two intervals per year, co-op shareholders can voluntarily cash in Kerry Co-op shares for a multiple of Kerry plc shares, currently a multiple of 5.9. The co-op shares are subsequently cancelled.
The co-op board sets a price range for the plc shares once all redemption applications are in to protect the Kerry plc share price.
Up to now, we understand the rules were that the Kerry plc shares have to be sold on the market to redeem the co-op shares for cash. A Kerry Co-op broker sells in one or more lots on the market.
Obviously, the operation of the most recent voluntary redemption scheme was slightly different to previous schemes if the co-op purchased up to €30m worth of plc shares. We understand the co-op is going to hold the shares, at least for the moment.
Since the sale of the balance of the shares to fund the scheme were sold on the market at €109 each, they have risen in value. Obviously, the co-op values the plc shares better than cash at the moment.
Shareholder contract
Speaking to shareholders since this emerged, a number of questions are coming up.
Have the terms of the redemption scheme changed? Is the contract shareholders sign, which suggests the plc shares will be sold on the market, still in place? Is the option to allow the co-op buy the plc shares in place in the rules or does it need to be? A spokesperson for Kerry Co-op said: “There were no changes to the terms and conditions of the share redemption scheme.
"However, the share price of Kerry Group fell due to Norges Bank Investment Bank selling their entire shareholding in Kerry Group plc (of 3,263,147 shares at €108.50), which pulled down the share price from €114, hence the lower return as the co-op were in the market at the same time. Norges were the fifth-largest shareholder in Kerry Group plc and they did not give any reason for the sale.”
The Irish Farmers Journal understands the key rules that shareholders sign up to in the terms and conditions of the share redemption scheme are as follows:
The value of the Kerry Co-op share will be based on a multiplier of 5.9 Kerry Group plc shares for each Kerry co-op share. Kerry Group plc shares will have to be sold to redeem the Kerry Co-op ordinary shares for cash. The price achieved by a Kerry Co-op broker will be averaged and proceeds paid net of stamp duty and commissions. Fall-out
Seemingly, some co-op directors weren’t aware of this new approach to dealing with the co-op shares. Does this action herald a new way of handling the share sale into the future?
Some shareholders are also concerned that they were not alerted to any change in the co-op handling of the scheme. Does this give rise to the situation where the co-op can play the share market, potentially making a profit on the back of co-op shares redeemed?
The co-op obviously knows what co-op shares are set to be redeemed and hence the number of plc shares that need to be sold, before they go to the market.
Scanlon deal
As well as the co-op, the Kerry Group boss obviously thinks the shares are valuable at the moment. The 10,000 shares in his deal were acquired at €110.92 each, according to the stock exchange files.
The Kerry Group annual report at the end of 2020 shows the Kerry boss had 26,810 shares, but, after exercising stock options and purchases in 2021, his shareholding must now be over 40,000 shares, meaning his shareholding is worth over €4.5m.
Following the sale of its meats and meals division to US Pilgrim’s Pride in September, expectations were that the share price would rise further, as the company strategy is to play in the higher margin businesses.
Share price started off at €123 in January 2021, reached a high close to €130 per share in July 2021, and has been on the slide since, to €108 per share on 1 December.
Share prices have rallied in the first days of December from a low of €108 to €116 per share (Friday 10 Dec).
Stock exchange files show Kerry Group plc boss Edmond Scanlon purchased €1.1m worth of shares on Thursday.
The Kerry boss obviously thinks they are value and Kerry Group is still predicting good financial numbers for the year.
The Kerry Group share price has dropped significantly since July, when it reached €130 per share.
Kerry Co-op
Interestingly, it has also emerged this week that Kerry Co-op CEO Thomas Hunter McGowan is believed to have spent over €30m of co-op funds to purchase Kerry plc shares for the co-op.
While reporting to a Kerry Co-op shareholder advisory committee meeting, the Kerry Co-op boss suggested that the co-op purchase plc shares to the tune of over €30m, instead of selling them on the open market.
To fund the balance of the scheme, a further circa €30m worth of plc shares were sold on the market at €109 each per plc share.
How it works
At two intervals per year, co-op shareholders can voluntarily cash in Kerry Co-op shares for a multiple of Kerry plc shares, currently a multiple of 5.9. The co-op shares are subsequently cancelled.
The co-op board sets a price range for the plc shares once all redemption applications are in to protect the Kerry plc share price.
Up to now, we understand the rules were that the Kerry plc shares have to be sold on the market to redeem the co-op shares for cash. A Kerry Co-op broker sells in one or more lots on the market.
Obviously, the operation of the most recent voluntary redemption scheme was slightly different to previous schemes if the co-op purchased up to €30m worth of plc shares. We understand the co-op is going to hold the shares, at least for the moment.
Since the sale of the balance of the shares to fund the scheme were sold on the market at €109 each, they have risen in value. Obviously, the co-op values the plc shares better than cash at the moment.
Shareholder contract
Speaking to shareholders since this emerged, a number of questions are coming up.
Have the terms of the redemption scheme changed? Is the contract shareholders sign, which suggests the plc shares will be sold on the market, still in place? Is the option to allow the co-op buy the plc shares in place in the rules or does it need to be? A spokesperson for Kerry Co-op said: “There were no changes to the terms and conditions of the share redemption scheme.
"However, the share price of Kerry Group fell due to Norges Bank Investment Bank selling their entire shareholding in Kerry Group plc (of 3,263,147 shares at €108.50), which pulled down the share price from €114, hence the lower return as the co-op were in the market at the same time. Norges were the fifth-largest shareholder in Kerry Group plc and they did not give any reason for the sale.”
The Irish Farmers Journal understands the key rules that shareholders sign up to in the terms and conditions of the share redemption scheme are as follows:
The value of the Kerry Co-op share will be based on a multiplier of 5.9 Kerry Group plc shares for each Kerry co-op share. Kerry Group plc shares will have to be sold to redeem the Kerry Co-op ordinary shares for cash. The price achieved by a Kerry Co-op broker will be averaged and proceeds paid net of stamp duty and commissions. Fall-out
Seemingly, some co-op directors weren’t aware of this new approach to dealing with the co-op shares. Does this action herald a new way of handling the share sale into the future?
Some shareholders are also concerned that they were not alerted to any change in the co-op handling of the scheme. Does this give rise to the situation where the co-op can play the share market, potentially making a profit on the back of co-op shares redeemed?
The co-op obviously knows what co-op shares are set to be redeemed and hence the number of plc shares that need to be sold, before they go to the market.
Scanlon deal
As well as the co-op, the Kerry Group boss obviously thinks the shares are valuable at the moment. The 10,000 shares in his deal were acquired at €110.92 each, according to the stock exchange files.
The Kerry Group annual report at the end of 2020 shows the Kerry boss had 26,810 shares, but, after exercising stock options and purchases in 2021, his shareholding must now be over 40,000 shares, meaning his shareholding is worth over €4.5m.
Following the sale of its meats and meals division to US Pilgrim’s Pride in September, expectations were that the share price would rise further, as the company strategy is to play in the higher margin businesses.
Share price started off at €123 in January 2021, reached a high close to €130 per share in July 2021, and has been on the slide since, to €108 per share on 1 December.
Share prices have rallied in the first days of December from a low of €108 to €116 per share (Friday 10 Dec).
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