Kerry to explain co-op bid details

THE €33 million bid by Kerry Group for Newmarket Co-op will be explained in detail to the society’s shareholders at a meeting in Ballydesmond tonight.

Kerry officials will attend the meeting and answer questions relating to its offer to acquire the entire issued share capital of the Co Cork co-op for a price of €421 per share.

The deal, if approved, will be worth an average €39,000 to each of the co-op’s 680 shareholders, most of them in the Duhallow region of North West Cork. Approval by Newmarket shareholders and the Competition Authority will be required if the deal is to go ahead.

Tonight’s information meeting will be followed by a special general meeting in Meelin on September 2 to decide on the offer, which requires 66% approval.

Both meetings will be strictly confined to shareholders. Proof of identification will be required for attendance.

The offer is being presented to the shareholders by the Newmarket board without a recommendation either for or against.

It will be up to the members to decide. The offer would require rule changes to be voted on by Newmarket shareholders if it is to proceed.

Members will be asked at next week’s special general meeting in Meelin to vote on the rule changes. If they are approved, members will then individually decide on whether to accept the offer.

It is understood the reaction of shareholders is generally positive, with local predictions that the proposal is likely to be approved on September 2.

Supporters of the deal predict it will be good for farmers and the region and that Kerry will continue to grow the business in Newmarket.

But some farmers are concerned there is no milk price assurance contained in the proposal and that the offer does not reflect what it sees as the co-op’s full value.

However, the independent financial and accountancy company, Pricewaterhouse Coopers, has advised the Newmarket board the Kerry offer represents fair value.

Newmarket chairman Patrick McAuliffe and chief executive Michael Cronin have urged all members to participate in “this fundamental decision” on the co-op’s future.

In a letter issued to shareholders with the Kerry offer document, they stated that tonight’s meeting in Ballydesmond Community Hall is intended to give members the opportunity to have the proposed transaction explained in detail, and the opportunity to ask questions or seek clarification about it.

They stated that participation in the information meeting should assist each member in making a more informed decision on the proposed transaction at the subsequent special general meeting in Meelin Sports Complex on September 2 at which the necessary rule changes will be formally voted upon.

The rule changes have been drafted on the basis that should the transaction not receive the required level of acceptances then the rules of Newmarket will remain “as is”.

Kerry Group chief executive Stan McCarthy said combining Kerry and Newmarket represents a positive growth and business development opportunity in the interest of all stakeholders.

Newmarket has 150 active milk suppliers and employs 110 people. It had an annual turnover of €56.6million in 2009 and is a leading manufacturer of cheese from a state-of-the-art production facility.

Broker reaction to the offer when it was announced was positive, with Paul Meade, NCB, saying the acquisition of one of the largest cheese manufacturing facilities in Ireland fills a gap in Kerry’s dairy manufacturing portfolio.

Newmarket’s facilities are modern and its growth in recent years focused on contract manufacturing natural cheese for many third parties, including Kerry, he said.

Bloxham Stockbrokers said the rationale behind Kerry’s offer includes access to a modern cheese plant with capacity to support its Consumer Foods division and adding manufacturing scale ahead of liberalised milk quotas.

“The deal is modest in a group context – Kerry spent over €140m on capital expenditure last year – but will, if carried, be a useful add-on to the Irish consumer operations,” it said.

* Weather conducive to the spread of potato blight will occur for a time tomorrow night in parts of south Munster and south Leinster.