Revenue is poised to value Kerry co-op shares over 50% higher.

This is due to last week’s decision by the board of Kerry co-op to press ahead with its share redemption scheme, known as the “cash for shares” scheme.

Documents seen by the Irish Farmers Journal show Kerry co-op has been advised there is a “very high risk” this share redemption scheme will be used by Revenue to value Kerry co-op shares much higher – as high as €500 per share.

Kerry co-op shares currently have a grey market value of about €300 per share, which Revenue is using as the valuation on co-op shares for gift/inheritance tax purposes when shares are transferred.

The share redemption scheme, approved by the co-op board last week, will give shareholders the option to sell some or all their co-op shares.

They will receive the full value of the shares, less a proportion as yet not decided, but probably around 10%.That will be withheld by the co-op, in part to cover costs, but also to provide seed capital for the board’s stated aim of acquiring agribusinesses.

Share values

Kerry co-op holds 6.12 Kerry Group plc shares for each co-op share in existence. With Kerry plc shares trading at €91.20 this week, the full see-through value of a single co-op share is over €550. Less the 10% withheld, it comes to about €505.

Revenue is now expected to use this value for tax purposes. It is significantly higher than the €300 per share grey market price. In order to extend this offer to all shareholders, the Kerry board must seek shareholder approval to, if necessary, reduce their shareholding in Kerry Group to below 10%.

This would require an extraordinary general meeting, expected to take place before 1 May.

The battle for control of the co-op’s destiny between the board and the shareholders alliance is likely to come to a head at that meeting.

Approval

The board last week also approved the transfer of Kerry co-op shares from a board member to his son.

Documents seen by the Irish Farmers Journal show that Kerry co-op board member Paddy Casey, who has an address at Knockeragh, Killarney, Co Kerry, transferred 350 co-op shares, worth €105,000 at the grey market €300/share value, to his son Paul.