Kerry Co-op shareholders agree by 80% majority to ownership changes

MORE than 1,600 Kerry Co-op shareholders yesterday agreed by an 80% majority to changes which will net them a €290 million windfall in a share exchange with Kerry Group.

Some 25% of the shares held by Co-op members will transfer to plc shares. The Co-op members will still retain 17.1% of the plc’s shares. The members had to agree to changes that would allow its ownership to dip below 20%. A second meeting on August 16 is expected to confirm yesterday’s vote.

Kerry Group corporate affairs director Frank Hayes said this meeting was a continuation of a process that started when the company first floated. Between yesterday’s meeting and another meeting scheduled for August 16, also in Tralee, the Co-op members are expected to agree to change the company rules to allow them to divest of a quarter of their shareholding in the group.

Frank Hayes said: “This first of our two general meetings went very well. Over 1,600 shareholders attended. The vote went 80% in favour and 20% against. The shareholders will now be free to sell or hold onto the shares as they see fit.”

The ballot is restricted to the Co-op’s 4,400 ‘A’ grade shareholders, of whom around 3,900 are Kerry Group milk suppliers. Once agreed, the deal vote will lead to a share exchange with the plc worth €290m to the Co-op’s 12,500 A, B and C grade shareholders.

This share transfer that will see the Co-op members’ shares in Kerry Group diluted and the percentage of its ownership dip below 20%. These members currently hold 22.8%.

The current rules prohibit the Co-op members from holding less than 20%. The new regulations will lower that floor to 10%.

It’s also proposed that co-op representation on the Kerry Group plc board would be cut from seven to four. This will be voted upon separately at a third meeting in September.

For these regulatory changes to be passed, more than 75% of the Co-op’s members will have to vote in favour of the proposed changes.

The conversion rate for the shares is set at 6.66 plc shares for every Co-op share. With plc shares at €29, the Co-op shares stand at around €193 each.

Kerry Co-op sold around 1.5 million plc shares in May. The shares were sold for €28.25 each giving a return of more than €42m.

The shares yesterday stood at around €29.07, which when multiplied by the 10.1m shares moving to the plc amounts to a €290m windfall for shareholders, who can now either sell or hold onto the Kerry Group shares as they choose.

It is extremely likely that the Co-op members will agree to the proposed changes over the course of the two meetings, between yesterday and the meeting on August 16, also scheduled for the Brandon Hotel, Tralee.