Shareholders at the extraordinary general meeting of Avonmore Foods plc have voted in favour of the proposed merger with Waterford Co-Op.

The vote comes in advance of Friday's second and final special meetings at both co-ops, which look likely to give final approval to the merger.

Meanwhile, at the annual general meeting of Waterford Foods plc, group managing director, Mr Matt Walsh, said that since the company's late profit warning last year, all issues including stock exchange queries, had "been satisfactorily resolved and appropriate action taken".

No vote was taken at the Waterford meeting on the question of the merger and no one spoke from the floor on the issue.

Mr Walsh did say that a "large attendance" would be needed at next

Friday's special meeting if the required 75 per cent majority was to be reached.

He said Waterford Co-Op would "make a highly significant contribution to the enlarged operation, through the high quality of our assets and milk pool".

He stated that "putting Waterford and Avonmore together creates a business with the scale and market position required to go forward into the future period of change".

He also said: "Weak international dairy markets and high relative milk prices severely impacted on Waterford's 1996 performance". He said it was "essential that milk prices and market returns are kept in balance if the group stands alone, but the savings arising from the merger will provide scope to be a leading payer for milk into the future".

The IFA Co Waterford Executive has said "there is now a real danger the merger could be defeated if insufficient members turn up to provide the required 75 per cent majority".

A spokesman added that "if 75 per cent is not achieved farmers will not get the benefits of milk price or share spin-out".

In another development, ISME have strongly criticised the merger, saying the co-ops "seem to have forgotten the co-operative spirit".

ISME said that a recent decision by Avonmore Co-Op to "unilaterally and without consultation delist 135 supply companies" represented a

"seriously high-handed approach" to supply companies.

The organisation's spokesman, Mr Frank Mulcahy, said he did not know why Avonmore made such a move, but he suspected it was "part of cutting costs in both co-ops to facilitate the merger".

A spokesman for Avonmore CoOp was not available for comment.