Kerry Co-op's plan to buy Kerry Group's dairy division for €500 million means the co-op will operate plants responsible for major brands including Cheestrings and Dairygold.
Kerry Dairy Ireland operates six manufacturing plants in Ireland and the UK where they make products exported to almost 60 countries.
Kerry Dairy Ireland also operates 31 Farm and Home Store shops, and owns a feed-mill in Farranfore.
All of these enterprises are included in the deal.
As part of the deal, which is still subject to shareholder approval, Kerry Co-op members would exchange approximately 85% of their co-op shareholding for Kerry Group plc shares, receiving 6.25 Kerry Group shares for each Co-op share held, with a total value of €1.4 billion.
Instead of their restricted co-op shares, members would now own Kerry Group shares directly, which they could trade freely on the open market.
The share exchange is structured so that Irish resident members would avoid immediate tax implications.
Capital gains tax would only apply on the eventual sale of Kerry Group shares and not at the time of the exchange.
The share exchange would reduce Kerry Co-op’s stake in Kerry Group to free up money to pay for the acquisition.
Kerry Co-op would keep about 15% of its Kerry Group shares, worth around €251 million, to finance the initial 70% stake in Kerry Dairy Ireland, alongside an estimated €56 million of additional debt.
However, the co-op says it aims to manage this debt sustainably, so the acquisition won't overburden the business.
There would also be an arrangement which would ensure Kerry Co-op fully owned Kerry Dairy Ireland no later than 2035.
Kerry Co-op expects to complete the 70% acquisition of Kerry Dairy Ireland by the end of January 2025.
