On Monday this week, the application window for Kerry Co-op’s share redemption offer, known as the “cash for shares” scheme, opened for all shareholders in the co-op to apply. This is a voluntary scheme for shareholders and the application window will remain open for just over three weeks until Wednesday 5 June.
The scheme is designed to act as a new mechanism to give liquidity to Kerry Co-op shares, ie to make it easier for Kerry Co-op shareholders to sell their shares. At present, Kerry Co-op shareholders are effectively “locked in” as there’s no official market for trading shares.
Shareholders will vote at the AGM of Kerry Co-op on 19 June in Tralee on whether this new scheme should be approved. Kerry Co-op is still working with ICOS to establish whether this scheme needs a 50% or two-thirds majority to pass a shareholder vote.
Shareholders will also vote to change a rule in Kerry Co-op that will allow the board to reduce its stake in Kerry Group plc below 10%. The co-op currently holds a 13.7% shareholding in Kerry Group plc.
There are 13,335 shareholders in Kerry Co-op (see Figure 1), who hold just over 3.9m Kerry Co-op shares between them.
The average shareholding among A and B shareholders is believed to be around 400 shares
Of this total, 25% are what are known as A shareholders (active farmers). A further 25% are deemed to be B shareholders (retired from farming in the last five years), while the majority, or 50% of shareholders, are C shareholders (non-farmers).
Only A and B shareholders may vote at the upcoming AGM in June. While C shareholders cannot vote, they are eligible to participate in the redemption scheme.
The average shareholding among A and B shareholders is believed to be around 400 shares, which have a combined value of approximately €250,000. Some shareholders have as many as 4,000 shares, which would be valued at €2.5m.
What is a share redemption scheme?
The share redemption scheme put forward by the board of Kerry Co-op will allow shareholders to redeem their co-op shares in return for a cash payment.
Kerry Co-op will then cancel these shares.
One share in Kerry Co-op is roughly equal to six shares in Kerry Group plc
The cash value of Kerry Co-op shares will be linked to the current share price of Kerry Group plc as shares in Kerry Group plc are the primary investment of Kerry Co-op.
One share in Kerry Co-op is roughly equal to six shares in Kerry Group plc, meaning the value of a Kerry Co-op share is around €600 based on Kerry Group plc’s share price this week at €103.
If passed at the upcoming AGM, Kerry Co-op will have two windows every year going forward in May and November when the share redemption scheme will be open.