Will pressure from shareholders spell

WHAT do Kerry Coop shareholders really want? That’s the question that should be top of the agenda at today’s AGM of the country’s richest co-op.

The 13,500 shareholders are sitting on top of a 13.7pc Co-op stake of around 24 million shares worth nearly €2bn in Ireland’s most successful food company, Kerry PLC.

But whether the 28-man co-op board led by Mundy Hayes has any appetite to get stuck into the real elephant in the room is another question.

The board is currently motoring along without a CEO after Stan McCarthy announced he was stepping down from the Kerry Co-op as a row over the milk price rumbled on. The months have also rumbled by but so far no one has been hired.

The long-running arbitration that was started nearly a year ago to sort out whether Kerry was sticking to its promise to pay a “leading milk price” looks like it won’t have anything to report until the autumn. That’s a long time to wait for your final milk cheque for 2015.

I hear that a “very generous” offer north of 1c/ litre has been put forward as a 13th payment for 2016 but that too is in danger of heading for arbitration if the board fails to settle before the end of the month.

All the while, the co-op’s running costs have doubled to close on €1.4m.

At least €450,000 of that goes to the co-op board in fees.

Presumably a good chunk of the rest is accounted for by the sudden interest that Revenue took in the southwest’s most prolific cash cow.

Test cases between shareholders and the Revenue over how the capital gains from their co-op shares should be treated are already in train, and could go on for years.

Much centres on the deal that the original Kerry supremo, Denis Brosnan, did with Revenue many moons ago that affords special treatment for agricultural co-ops in the form of the 701 tax cert.

In some ways, Kerry Co-op shareholders can afford to be blasé — they’ve €12m in annual dividends pouring in the door every year from their massive PLC shareholding.

Following the recent move by Glanbia Co-op to buy back a share of its dairy and agribusiness, many are talking about how the Kerry Co-op warehouses the shares, while the PLC owns the processing facilities, farm stores and milling facilities.

Sure, the co-op ‘negotiates’ with the PLC on milk price, but are they really able to extract any more from the commercial entity that is the PLC than would a well-organised producer group?

All the while, shareholders’ assets are locked up in a Co-op that doles out goodies every couple of years. What the increasingly restless shareholders in Kerry Co-op might be interested to learn is that the board already has discussed the best way for shareholders to cash in their chips without incurring punitive 33pc capital gains taxes.

Options

Lo and behold, one of the options discussed that might be the best way to keep the Revenue happy is to convert all the Co-op shares at once to PLC shares. But this would be the end of the Co-op.

Of course, turkeys don’t vote for Christmas, and the Kerry Co-op board has been particularly hostile to any