Kerry Group says sale of €800m dairy arm is off

A planned €800m sale of Kerry Group’s primary dairy business to Kerry Co-op is off.  It is understood a proposal from the Co-op fell short of what management at Kerry Group were seeking. 

The news, and the prospect of a third party now coming in to buy the dairy business that was once the heart of the entire Kerry empire is likely to add further strain to the already tense relations between the farmer owned co-op which is still a major shareholder in stock market listed Kerry Group.

Kerry Group said it is still conducting a strategic review of its dairy-related businesses in Ireland and the UK, but talks with Kerry Co-Operative Creameries Limited in relation to a potential transaction have been suspended, Kerry Group said on Thursday. A statement hinting that talks with any alternative buyer are not imminent, even though it is still considering options for the dairy business.

"While the strategic review continues, there is no certainty that this will lead to a transaction and a further update on the strategic review process will be communicated later this year.”

In January the board of Kerry Co-operative Creameries decided in principle to move ahead with a deal that values the dairy business at €800m.

That move had ended months of speculation, with a bid delayed by a split within the Co-op of whether or not to purchase Kerry Group’s main milk processing and trading facilities at Listowel, Farranfore, Newmarket and Charleville, plus the company’s dairy spreads business at Ossett in West Yorkshire.

Some of the Co-op’s 12.3pc shareholding in Kerry Group, which is valued at nearly €2.5bn, would have been used to fund the transaction and a deal was to have left Kerry Group with a 40pc stake in the new joint venture, to be bought out over time.

Kerry Group’s milk processing business has a turnover of around €1bn and delivers profits of close to €75m each year.

Relations between Kerry Co-op and Kerry Group have been severely strained over the last number of years due to conflicting interpretations of a commitment by Kerry Group management to pay Ireland’s “leading milk price”.

In a statement this evening, the Board of Kerry Co-Operative Creameries Limited said that with the prime focus of protecting the interests of, and delivering for all its stakeholders, the Co-Op, over the past 18 months, engaged in a thoroughly professional approach to give this potential opportunity every possibility of success.

"We believe a fair valuation was put on the proposed transaction," is said and that the Board of Kerry Co-Op will remain open to evaluating opportunities.

Online Editors