So it was almost inevitable. The weight of powerlessness among farmers, milk suppliers and shareholders in this long-running, but secret deal between Kerry Co-op and Kerry Group has pulled the potential deal down.

It’s not the Kerry way. It wasn’t the Kerry way. Shareholders always had their say.

Maybe COVID-19 was to blame for the many hurdles along the way, but most milk suppliers will be thankful COVID-19 is probably at least partly responsible for closing down this deal. They wanted to engage for a variety of reasons.

Maybe both parties can salvage something before the year is out.

Engage in the process

We have always said it wasn’t going to succeed unless shareholders got a chance to vote or at the very least engage in the process.

The mood on the ground of farmers in the last week has been reflected in this action and the threat of legal action was the final straw.

What must happen now?

The leading milk price piece must be sorted once and for all. It’s clouding decisions on both sides and can be dealt with separately from any joint venture deal.

The co-op board needs to dust themselves down and get back to representing shareholders and listening to concerns and challenges.

We don’t know if Kerry Group has another potential buyer waiting and if they will deal with them before renegotiating with Kerry Co-op.

Stack up

We don’t know for certain if the bid was rejected yet, but the language in the Kerry Co-op statement would lead you to believe they went in under the €800m bid that had been publicised and it wasn’t successful or at least didn’t stack up for Kerry Group right now.

Perhaps it wasn’t the price at all and perhaps the Kerry Group and Kerry Co-op were not easy bedfellows given the political and volatile entity Kerry Co-op is, even if it was a short-term joint venture arrangement.

The Kerry Group statement in full is as follows:

As announced in February 2021, Kerry Group plc is conducting a strategic review of its dairy-related businesses in Ireland and the UK. As part of the strategic review, Kerry Group plc confirms that discussions with Kerry Co-Operative Creameries Limited in relation to a potential transaction have been suspended. 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.

The Kerry Co-op statement in full is:

The Board of Kerry Co-Operative Creameries Limited notes the decision of Kerry Group plc to suspend discussions relating to a potential transaction concerning the Group’s Dairy business. 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. The Board of Kerry Co-Op will remain open to evaluating opportunities.

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