Kerry Co Op Shares

not as bad as I thought, plenty to ponder for the A shareholder, definitely a good few of the "No" lads were doing the circuit as the top table seemed quite familiar with their questions and attitude.

Mr Woulfe didn't like being questioned on his fee either. While the stronger applause was for the people "Vote No have another Go" I think the most of the neighbours I talked to after had formed the opinion this is as good as it gets and would vote Yes.

All in all 80% of the crowd were 60 or older I'd guess and were there to hear how to cash in the COOP shares once and for all.

the EY lad took most of the Q&A and was well able for it, even if some of it was a bit OTT in terms of his or other of the advisors abilities.

THis is next week's FI. an analysis by Lorcan Allen of the deal. He seems positive about the deal. The food brands are worth a substantial amount of money. Probably a lot of the price the way the deal is structured. As it's behind a pay wall I have it copied out below.

One thing to note the company forecast EBITD is 77 million so it looks like 2023 55 million profit was an abnormal. On thise figures. The company is being bought fir 6.5 time EBITA.

I can tell you now there will be no second bite of the cherry. A private company will pay well for them food brands and close down the rest of the milk pro messing. Sell the shops and sell the sites

As I have posted previously Kerry are in reality selling this for 400-430 million the way the deal is structured

https://m.independent.ie/farming/agri-business/lorcan-allen-the-500m-question-can-kerry-co-op-deliver-for-farmers-again/a1520863591.html

It’s just over two weeks since Kerry Co-Op announced it had reached an agreement with Kerry Group plc to buy the company’s Kerry Dairy Ireland subsidiary as part of a €500 million deal.

The deal is just the latest chapter in the fabled history of Kerry Group, which was originally formed as a dairy co-op in 1974 and evolved over time into one of the world’s leading food ingredients and flavours businesses, creating enormous shareholder wealth along the way.

Kerry Co-Op still holds a 11% stake in Kerry Group, which is valued at more than €1.6bn today. Under the terms of the agreement, which is complex and multifaceted, Kerry Co-Op plans to ‘spin-out’ 85% of its shares in Kerry Group plc (worth about €1.4bn) to its 12,000 shareholders, while the remaining 15% of its shares will be invested to part-fund the acquisition of the Kerry Dairy Ireland business.

The deal will be completed over two stages, with Kerry Co-Op initially taking a majority 70% stake in Kerry Dairy Ireland for €350 million, with an option to buy the remaining 30% stake at any point up to 2035 for a further €150 million.

The move makes sense on a number of fronts, and it will see farmers retake control of the dairy processing assets their parents and grandparents originally founded more than 50 years ago.

With the shareholder information meetings kicking off this week, farmer shareholders in Kerry Co-Op will be asking some important questions, including what exactly is the business they’re proposing to buy, and is it capable of delivering sustainable returns?

Read also: Kerry’s farmers eye age-old wealth, but at what cost?

Financial performance

To begin answering these questions, it’s worth analysing the financial performance of Kerry Dairy Ireland over recent years (see figure 1). In a given year, the business will typically generate annual sales in the region of €1.3 billion and profits (Ebitda) of around €70 million.

Fig.1

Kerry Dairy Ireland generated significantly higher sales in 2022, but this was primarily due to the abnormal inflation in dairy commodity prices during that period. According to Kerry Co-Op, the business is on track to generate sales of €1.3 billion for 2024, and profits are forecast to reach €77 million, equating to a healthy earnings margin of around 5.9% this year.

Crucially, the Kerry Dairy Ireland business is one of scale. Processing in excess of 1.1 billion litres of milk per annum, the dairy company is one of the “Big Four” processors along with Tirlán, Dairygold and Lakeland Dairies, which between them account for more than 80 per cent of all the milk produced in Ireland.

Kerry Dairy Ireland comprises four business divisions (Dairy Ingredients, Nutritional Ingredients, Consumer Foods and Agribusiness) and operates seven manufacturing facilities. One of the standout characteristics of the overall business is the sheer breadth of its product mix.

As one industry insider put it, Kerry Dairy Ireland is probably the most diversified business in the Irish dairy sector producing everything from traditional dairy commodities such as butter, cheese and powders, to advanced protein ingredients and consumer brands.

For instance, at Kerry’s largest site at Listowel, milk is processed into a range of dairy ingredients such as butter, casein, demineralised whey, whey protein isolates and a variety of milk powders, which are sold to B2B food industry customers such as Schrieber, the US consumer dairy giant, Swiss multinational Nestlé and Barry Callebaut, the world’s largest chocolate manufacturer.

In Newmarket, Kerry Dairy Ireland produces around 35,000 tonnes of cheddar every year, making it one of the largest cheese businesses in Ireland and the UK. Between both sites, the business also manufactures several lines of consumer food products including brands such as Cheestrings, Charleville cheese, and the Dairygold butter spread.

Separately, Kerry’s Charleville facility produces a range of specialised dairy ingredients such as functional proteins, cheese solutions and infant formula that are sold to international customers such as Cargill, the US commodities giant, New Zealand dairy company Synlait, Bel Group, the French cheese multinational and Asian dairy buyers such as Feihe and Jun Le Bao.

In Northern Ireland, Kerry Dairy Ireland operates a cheese preparation business in Portadown, as well as a cheese slicing facility for foodservice customers in Coleraine, which also produces the Yollies yoghurt brand. Finally, the UK site at Osset in West Yorkshire produces a wide variety of dairy spreads for both retail and foodservice customers.

Innovation

Perhaps the greatest asset of Kerry Dairy Ireland is the skillset of its 1,580 employees, and the culture of innovation, new product development, technical expertise and brand building that is inherent within the business.

For decades, dairy brands produced by Kerry Dairy Ireland have held market leading positions across retail channels in the UK and Ireland, and the business has a strong track record for product innovation. A good example of this is the development and scaling of the Cheestrings brand over the last 25 years, which has proved a consistent driver of growth. Reflecting the continued strength of the brand, Kerry Group recently completed a significant expansion of the Cheestrings manufacturing facility in Charleville following an investment of around €30m.

The focus on added-value products and higher margin consumer brands also shines through when compared against the performance of other dairy co-ops. As can be seen in figure 2, Kerry Dairy Ireland generated almost €1.20 in sales for every litre of milk processed last year, which is higher than the market returns generated by Tirlán, Dairygold and Lakeland.

Fig.2

Even compared against international peers, Kerry Dairy Ireland generates higher revenues per litre of milk processed than global leaders such as Fonterra in New Zealand and Arla Foods in Denmark. Only Friesland Campina, the Dutch dairy co-op which owns a stable of global consumer brands and its own range of infant formula products, achieved a better return than Kerry Dairy Ireland last year.

Future

Farmers in Kerry Co-Op may look at the €500m price tag for Kerry Dairy Ireland and worry they are taking a big risk investing in the business. Yet the sums involved reflect the scale, attractive product mix, portfolio of brands and multinational customers, as well as the culture of technical innovation that comes with the business.

The timing of this deal is also important. With Ireland’s dairy industry currently at a crossroads and supply growth constrained by environmental regulations, Irish dairy farmers will be looking to their own co-ops to add the greatest value to their milk and maximise market returns.

On December 16th, Kerry farmers will have the chance to vote to acquire a business with a 50-year history in added-value and innovation. In the current environment for dairy farming, it’s unquestionably an investment worth making, which will return the business to co-op ownership under milk supplier control.

Lorcan Allen is an agribusiness analyst and Director of Business Development at Keating & Associates

The problem might be finding the tanker ( well the tractor unit anyway) and the driver. Tgere is a lad who was one of the orginal drivers that worked with a co-op trying to exit now a bit over a year left on his contract. He is finding no appetite by anyone to take it on. Yes other lads will buy the tractor unit but nobody is biting at the milk run. It's too hard to get drivers

The people against the jv have every right to express their views ,

And both sides should be heard ,

Ftm and bass have their views and vote with your feet , why down grade the other side , listen to them ,

The votes will tell the tale of the majority ,

And if these guys don’t want to be part of the jv then let them go where ever they find a buyer ,

Simple really ,

Who wants people involved that don’t fit , bad marriage
only down side is the kerry milk pool is going to drop 20% IMO

so the milk contribution of 1c litre is based on how many million litre jack ?
and have you seen any draft milk contract ?
and because they are not topping up all my milk jack they haven’t paid the top milk price .

I bought no fertiliser or ration off of kerry this year

1c litre on the peak milk months they can ‘choose’ to not collect it for a period in exceptional circumstances. Works out at about 0.75c litre over whole year milk for a supplier. This is set in stone on all milk suppliers supply if it goes up or down. Have you not read the beautiful piece of literature everyone was sent out from co op in the last two weeks regarding milk contracts being issued in due course, i.e. after this is passed and gets going under the new guise in January.

As @awaywithyou mentioned the majority of people involved in this deal are 60 plus and this deal will pass with a minimum of 85-90% of a yes vote. It might not be a great deal for milk suppliers going forward or new entrants from previous years but given the age profile of suppliers within kerry there is no risk of a no vote happening as the vast majority are winding down, no successor and want to have their shares converted and who would blame them.

Take whatever money is on offer to you here from arbitration or shares because regardless you’re not getting the leading milk price now and you certainly won’t be getting it after this deal.

Business Is Business is BS. It's not Amazon that I'm running. Relationships are more important.

why are kerry co op not showing us what a new contract looks like ,

It’s like asking the shareholders vote with out giving them any information , and just tell them EY and pwc said it’s all great and good , bla bla bla ,

they are giving the milk suppliers no information , just you pay in April to October and it can be deferred in a bad year and we SHOULD be able to pay a good milk price .

a lot of nothing and alot of faint maybes ,

And when is the top up been paid , after signing the new contracts ?

Have the redundancy packages and costs of decommissioning what plants they choose to close been factored in, what document have you seen that you can stand over the above statement....

Excellent article by Lorcan Allen. Since Lorcan Allen left, the quality of the IFJ’s reporting on agribusiness has been diabolical.

I attended shareholder information meetings and saw with my own two eyes the editor of The IFJ sitting in the room at one of the meetings. The mood was overwhelmingly supportive of the JV, but clearly, that didn’t suit the paper’s narrative. The editor sat there, witnessed it all, and yet chose not to report the truth. Instead, The IFJ loves giving a platform to failed directors who lost their board elections fair and square. And now, these failed directors seem to have joined forces with the fat-cat pension fund vultures.

Now, let’s talk about a former co-op director The IFJ has been quoting in their paper. This recently resigned director claimed he resigned because he didn’t believe in the JV. Back in 2021, when the Kerry Co-op board bid nearly double the price for the same dairy business, where was this (now former) director’s resignation? Or how about in 2021, when the co-op was sending solicitors’ letters on behalf of the board to shareholders, trying to confiscate shareholders’ assets—why didn’t this man resign then either?

As for The IFJ, here’s the best part: on the final Thursday before the vote, The Farmers Journal will dedicate its entire letters section to two pages of rubbish from these same failed directors and pension fund vultures. I could name them now—and honestly, I could probably write their letters for them, because it’s the same tired, self-serving nonsense every time 🤦‍♂️😂

In my opinion, The Farmers Journal should really be called the “Anti-Farmers Journal,” because instead of supporting farmers, it has become a mouthpiece for a handful of individuals trying to derail progress for their own gain and egos.

I do not think The IFJ has had one positive thing to say about the JV so far. The fact that The IFJ can’t bring themselves to say anything decent about it tells us all everything we need to know about them.

You should have grabbed the mic at one of the info meetings and entertained the room by explaining to the top table how paying income tax is somehow better than paying no tax at all. That would’ve been comedy gold.

The B shareholders you keep obsessing over will, under this deal, receive actual Kerry Group share certificates, shares in a new company, and dividends on all of them. It’s an undeniable win.

Meanwhile, the people currently selling their shares in the cash-for-shares scheme are throwing them away at a diabolical share price. They’re cashing out for half nothing, then turning around and paying income tax on that pittance. To argue that this is somehow better than sitting on the shares, waiting for their value to increase, and passing them on to your children completely tax-free is, frankly, absurd.

Your arguments are so nonsensical they’re almost painful to read. Honestly, engaging with you is exhausting, but do me a favour. Since you’re such a fan of the income tax scheme, here’s a letter that was printed in a national newspaper about it. Take a moment to read it, and then respond with some actual facts. It’s time to face reality.

DEAR EDITOR: Only 11 countries in the world have the "participation exemption" tax loophole in the first place, and Ireland has the easiest criteria of all those countries to qualify for it.

In Ireland, a company must only own 5% of the shares in another company to qualify for participation exemption, whereas some countries have their minimum threshold set at 10%.

Any future Government could easily change our threshold from 5% to 10% with the swipe of a pen in a new budget.

At the 2023 Kerry Co-op AGM, there were countless calls from the floor to lock in each
Kerry Co-op share at a ratio of 5.9 Kerry Group PLC shares.
I want to get one thing straight. It is impossible to lock in our co-op shares at a 5.9 ratio, because when Kerry Co-op's shareholding in Kerry Group drops from the current 11% to 5%, which is INEVITABLE with the "CASH FOR SHARES" scheme, then Kerry Coop will no longer qualify for "participation exemption".

Tax law:

When this happens, the Co-op will have to pay 33% capital gains tax on its Kerry Group shares, and then the shareholders will have to pay income tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) of up to 58% on the sale of their shares also, so shareholders will face a wipeout of their investment.

This is not scaremongering, this is a bonafide fact and it is tax law. There is no way to get around "participation exemption" - it is already an exemption. Kerry Co-op must operate under the same tax laws as the rest of the companies in Ireland. There can be no special concessions made for our co-op.

Previous Kerry Co-op boards allowed the Section 701 tax exemption to slip out of our grasp and I will not have it on my conscience to sit back and let them do it to us again with
"participation exemption".

We were all eagerly waiting for you to grab the mic at the Listowel meeting, KerryCow, and “give us all a piece of your mind” after the fuss you’ve been kicking up on boards. To say we were disappointed is an understatement. I didn’t actually see you at the meeting, but to be fair, with the huge crowd there, it was hard to see everyone. Still, it’s disappointing that you didn’t take the opportunity. Whenever I’ve had a problem with the co-op’s plans, I’ve always had the courage and conviction to stand up and say my piece in front of hundreds of people, no matter whether the room agreed with me or not. That’s what standing for something looks like.

There’s another man not 100 miles from either of us who’s been non-stop giving out on Twitter about the co-op and the JV. He’d want to watch his mouth because anyone speaking out against the co-op and this deal isn’t exactly having much luck getting re-elected to the advisory committees—very telling, isn’t it? This same man claimed he couldn’t get the mic at the Listowel meeting. The truth? Nobody even wanted it at the start of the Q&A—I genuinely thought for a moment there’d be no questions at all, and even after that, there weren’t many. The reality is clear: he was just too cowardly to stand up and say his piece.

As for the WhatsApp messages being passed around by the failed directors and pension fund profiteers, a friend of mine had the misfortune of being forwarded one. I told him to ignore it—it was such an incoherent mess that even the IFJ wouldn’t go near it. And by God, that’s really saying something 😂😂

I came across a fantastic article this morning featuring Henry Walsh, a progressive farmer and clearly a man of intelligence and thoughtfulness. He offers a clear and balanced perspective on the Kerry Co-op JV proposal.

Walsh highlights that the PLC no longer wants to be involved in milk processing. If the JV isn’t approved, the PLC will sell the business to an outside buyer, likely resulting in far worse terms for farmers and shareholders.

The deal itself is significant: a €500m business with seven manufacturing facilities, 1,500 employees, and a large trading network. It’s a profitable entity with strong assets and leading brands—a fantastic acquisition for the Co-op to secure farmer control.

For shareholders, the offer includes an 85% tax-free share conversion, making shares more tradable, alongside a €50m milk price top-up fund and a 15% share redemption to help fund the purchase. While not perfect, these measures mark substantial progress.

Walsh emphasizes that this is a once-in-a-lifetime opportunity for farmers to regain full control over milk processing and trading while protecting shareholder value. The deal ensures long-term profitability and sustainability for the Co-op.

Walsh has done his homework, read all the comprehensive literature, and plans to attend the information meetings to further educate himself. Based on his understanding, he fully intends to vote yes, recognizing this proposal as a major step forward for milk suppliers and shareholders alike.

Here’s the link:

https://m.independent.ie/farming/comment/henry-walsh-as-farmer-and-a-kerry-co-op-supplier-heres-how-ill-be-voting/a1720502975.html

Simple really the lowest margin arm of the group their margin will move from 15.6% to 17% once they are rid of Kerry dairy and a big percentage of their emissions will be offloaded also as they come through kerry dairy’s activities it is a win win for the group. Share prices will increase no doubt once this is passed and create greater shareholder value for the plc it’s a no brainer for them to offload.

No figures... yet to be determined was the words used