Dairygold to push for merger

DAIRYGOLD is expected to make a strong case for the merger of South Western Services (SWS) with IAWS Co-op when the board of SWS meets today.

This follows a meeting of all five stakeholders in SWS at the Great Southern Hotel at Cork Airport on Monday.

Apart from Dairygold which holds 55% of the equity in the Bandon-based group, Barryroe Lisavaird, Drinagh and Bandon Co-ops are the other stakeholders.

Drinagh holds 28%, with the other two co-ops holding more or less similar holdings between them.

Dairygold refused to comment on their intentions last night but it is understood its chief executive Jerry Henchy made it clear at Monday’s meeting he wanted to realise his SWS investment.

Previously Mr Henchy was less inclined towards a deal with IAWS.

It is unclear where the rest stand but it is understood that IAWS’s swoop on NTR’s shares since early January has caused some concern about the proposed merger at this stage.

Whether it is of sufficient importance to block the deal is not at all clear.

The West Cork co-ops favoured the merger initially because they saw it as a means of realising value in their investment through early flotation of the merged entity on the Irish stock market.

SWS’s voting structure is complex and in the past decisions on strategy were taken in unison.

The appointment of John Walsh, chairman of Dairygold, and of Peter O’Donoghue, its chief financial officer to the SWS board is also seen as significant.

Observers of the musical chairs going on in the case of SWS suggest those appointments have indicated Dairygold at this stage favours an SWS merger with IAWS.

Mr Henchy has previously pledged to float off the consumer foods end of Dairygold once rationalisation was finalised.

That process is drawing to a conclusion and it is also emerging that he may have big ambitions for 4Homes, the DIY end of the group’s business.

Today’s SWS board meeting is unlikely to reach any conclusions about the possible deal.