Kerry Group to sell dairy division to Kerry Co-op
Dairy 1 Kerry Each Year Litres Processes Holdings Milk Of Billion 1
The board of Kerry Co-op has reached an agreement with Kerry Group to acquire Kerry Dairy Holdings, the food giant's dairy ingredients and consumer food products business.
The €500m deal will only proceed if approved by a majority of the co-op’s shareholders at a Special General Meeting.
Kerry Dairy Ireland is a current business division of the Kerry Group processing over 1.1 billion litres of milk annually from 2,740 family farms across Munster. It employs more than 1,500 staff, exporting to over 58 countries worldwide.
The business delivered sales of €1.3bn in 2023 and has a strong portfolio of dairy food brands including Cheestrings, Dairygold, EasiSingles, LowLow, Kerrymaid and Charleville.
Kerry Co-op currently holds around 11% of Kerry Group worth €1.7bn. If the deal is approved, the co-op will cease to be a shareholder in Kerry Group.
The value of the co-op’s current shareholding will see shareholders given shares in Kerry Group for 85% of their co-op shareholding. The remaining 15% will be re-invested, with additional borrowings, to acquire Kerry Dairy Ireland in two stages.
Under the agreement being recommended to members, 70% of Kerry Dairy Holdings will be acquired before the end of January 2025 and 30% in the period up to 2035. A value of €350m has been set for the 70% interest based on a total Enterprise Value of €500m.
This Special General Meeting will take place at the Gleneagle INEC Arena, Killarney at 12 noon on Monday, December 16. The co-op said a member brochure providing details on the proposal is being distributed to members over the coming days.
James Tangney, Chairman of Kerry Co-op, said they were pleased to have reached an agreement that will deliver full ownership of one of the dairy businesses, while also releasing 85% of their members' Kerry Group shares to be retained or sold by each of them at a time of their choosing.
“Kerry Co-op and Kerry Group have a shared heritage that has helped create value, pioneer change and shape the dairy industry, but we have come to a fork in the road where both organisations require the freedom to grow in a manner best suited to the needs of their stakeholders.
"As direct shareholders in the plc, members will continue to gain from the group’s progress and, in tandem, the co-op will focus on ensuring Kerry Dairy Ireland becomes a platform for future growth. It will also give farmers a greater voice in a business that is critical to their farming futures."
Advising its members, the co-op said there should be no upfront tax charge as a consequence of this transaction and any tax on capital gains would only become payable in the event of a subsequent sale or transfer of the Kerry Group shares.