DISPUTE OVER SHARES AT KERRY CO-OP

AN increasingly serious dispute over Kerry Group shares is expected to dominate proceedings at the Kerry Co-op AGM which takes place today ( Wednesday).

Kerry Co-op currently holds a 13.7 per cent stake in Kerry group – worth approximately €2.2 billion – and a significant number of Co-op numbers are calling on the society to cash in its stake in the global food giant.

Each of the special shares held by Kerry Co-op are, nominally, worth 6.12 standard Kerry Group Plc shares.

While the Plc shares are trading at around €90 (they were €89.85 on Tuesday) each of the Co-op shares are worth up to €550 apiece.

If Kerry Co-op were to sell off all of its Kerry Group shares and split the proceeds, members could be looking at massive cash windfalls of at least €165,000 each and possibly far more depending on how many special shares they hold.

However, the members’ call is opposed by management who are advising that the move might not benefit from the same favourable tax exemptions that applied to seven previous share “spin-outs” between 1993 and 2013.

In previous years the 701 clause in the Finance Act allowed co-op members to receive plc shares in a spin-out arrangement whereby shares are divested through the creation of a newly created company – without incurring an immediate tax liability.

This concession has formed part of a Revenue review in recent years with a test case slowly working its way through the courts and the legal battle expected to take years to fully resolve.

The AGM is also expected to hear debate on possible changes to shareholder voting rights – currently only a fraction of the 13,000 members have a vote – and proposals from the Board aimed at moving the Co-op away from its current role as an investment entity to become a fully trading operation with its own agritrade business and its own independent milk processing facilities.