Only one in five Kerry shareholders want Kerry Co-op to try to buy Kerry Group’s agribusiness, a co-op shareholder consultation has revealed.

Similarly, there is little appetite among shareholders to find strategic partnerships with other co-ops or milk processors.

Lukewarm response

It is a lukewarm response, with a higher proportion of respondents calling for the co-op to be dissolved with a full spin-out of it’s €2.2bn shareholding in Kerry Group.

The co-op surveyed the 6,700 A (milk producing) and B (recent milk producer) shareholders in the autumn by way of a postal consultation.

Shareholders were not asked to approve the exercising of the option to purchase Kerry Group’s agribusiness, but merely whether they approved of the co-op exploring that option. Only 308 of the 1,507 respondents supported this proposal – only one in five, or 20%. Worse still, it is only 5% of the total number of A and B shareholders, as less than one in four returned the consultation document. The option must be triggered by the end of January

The second proposal, that the co-op should pursue a merger, joint venture, or other strategic alliance with another milk processor or co-op, was slightly better received. Still, only 336 (23%) of respondents supported this.

It is the clearest indication yet of the level of support the board has for its view to change the direction of the co-op, which currently solely exists to represent milk suppliers with Kerry Group in respect of milk price and other issues. The co-op’s asset base is its 13.7% shareholding in Kerry Group, worth over €2.2bn.

Trading co-op

Co-op chair Mundy Hayes and his board believe that in order to remain relevant to members, the co-op must once again become a trading co-op with milk processing facilities.

In direct opposition, the Shareholders Alliance, which emerged during the summer, wants the co-op dissolved, with a small proportion of money assigned to the setting up of a new co-op for milk suppliers only. Currently, only one in four shareholders are active milk producers, and an estimated 500 Kerry milk suppliers have no shareholding.

There are 13,269 shareholders, over half of whom are C (dormant or dry shareholders). They would receive €165,000 on average if a full spin-out occurred. Until now, both the board and the Shareholders Alliance say they speak for the silent majority of shareholders who don’t attend meetings or engage in co-op politics. The Shareholders Alliance will surely be happier with this outcome.

Strategy

Kerry Co-op says the consultation process forms only a part of their strategy formulation, but it certainly is far from a ringing endorsement of their stated aims. They also point out that it was not a vote or ballot, but simply a sounding board exercise. The sound being heard is predominantly a mixture of indifference and outright opposition to their plans.