The Irish Farmers Journal understands that Kerry Group plc is willing to return to talks with Kerry Co-op over the sale or establishment of a joint venture structure for its dairy business.

Kerry Group has restructured management of this dairy business after the sale of the Meats and Meals business to Pilgrim’s Pride.

Some commentators had predicted that the potential dairy deal was off the cards completely.

If an agreement can’t be reached with the co-op, it is understood that Kerry plc will look to other interested external parties to purchase the dairy business.

There has been some ongoing discussions in the background between both parties relating to due diligence matters of the last failed deal, but it is understood that talks are set to ramp up in the coming weeks.

Who will work on behalf of the farmer co-op to negotiate this deal is still unclear. Potentially, the sub group of the co-op board will lead negotiations with PriceWaterhouseCoopers (PwC).

PwC was originally part of the failed negotiation last year.

However, some parties to the deal want other professional firms to represent the co-op in the deal-making.

The plan for the exact structure of the deal is not yet known. However, a 60% joint venture with the plc would still look the best option for both parties.

Potentially, a clause would be included to give the co-op the option to buy the business outright in 10 or 20 years’ time.

Much of the row at co-op board level previously centred around how the deal may be funded. In the long term, if this deal is to be farmer-owned and run by elected shareholders, then active milk suppliers are best placed to operate the new structure. Dry shareholders, many of whom are looking to cash in their shareholding, are looking to exit the business outright rather than leave their shareholding as collateral for any new venture.

There are some suggestions that whatever money is owed to settle the leading milk price row would form some of the co-op ownership stake, where it might be possible to cash in on exit from the dairy business.

It has also been suggested that some reduction in the conversion value (a so-called “haircut”) of plc shares for co-op shares could form another chunk of the funding.

Dairy farmers may also be asked to share up to a certain level.

The Irish Farmers Journal understands that former agribusiness general manager Pat Murphy assumes the position of CEO of the dairy business.

Internal interviews were carried out to fill the agribusiness role and James O’Connell was successful and moves into general manager of the agribusiness division.

Shareholder row

The Irish Farmers Journal also understands the row between the co-op board and the shareholder seeking to sell his shareholding, subject to board approval, has not been resolved.

As we go to press, it looks likely the deal between the shareholder, Davy’s, and five potential buyers remains hanging in limbo.

Meanwhile, it is understood that the co-op is not planning to have face-to-face shareholder meetings this autumn.

It had been expected if COVID-19 restrictions allowed, that shareholders would gather to discuss potential options.