Kerry sells the last of its liquid milk divisions to Lee Strand Co-op

Terms have been agreed recently and industry sources say the takeover will come into effect at the end of this month (29 June).

The sale price has not been disclosed and the deal is subject to approval by the Competition Authority.

The next stage in the process will see a period of consultation, which will run into July, with Dawn’s staff over any potential consolidation and redundancies which may materialise.

As part of the deal, Lee Strand have agreed a six year contract to buy milk from Kerry where it will pay Kerry a milk price to reflect an agreed liquid milk margin over and above the manufacturing milk price at any given time. What Kerry in turn will pay its own liquid milk suppliers is up to Kerry.

The consolidation will avoid much of the duplication associated with the separate entities distributing liquid milk to the same stores around Kerry and west Limerick.

Unknown future

The future of Kerry’s Dawn dairy plant in Killarney is, as yet, unknown, but the plant has been regarded as outdated and may be decommissioned over time.

This deal increases Lee Strand’s liquid milk pool from 6m litres to 20m litres, making the Co-op the fifth largest liquid milk processor in Ireland.

It will also expand Lee Strand’s geographical reach into West Limerick, North Cork (Duhallow, Newmarket, Rockchapel, Kanturk, Millstreet) and into west Cork to Skibbereen and the Beara peninsula.

Kerry sold its Dawn business in Cork to Clona Dairies in 2000, and subsequently closed its Moate and Tuam outlets. It sold its Galway business to Arrabawn in 2010 and more recently its Limerick business to Glanbia in 2011.

Lee Strand have invested heavily in their Lee Strand branded milk and, along with Centenary Thurles, are one of the few own brands to withstand the market share erosion experienced by all others from private label sales.