THE proposed reduction in Kerry Co-op's share holding in Kerry Group dominated proceedings at yesterday's annual general meeting of the group in Tralee. Over 200 shareholders attended the meeting.
Chief executive Mr Denis Brosnan was at pains to reassure shareholders that the proposal to reduce the co-op's stake from 52 to 39 per cent would not jeopardise the future independence of the group. Later he told The Irish Times that the vast majority of the co-op advisory meetings he had attended had been unanimously in favour of the rule changes.
"The question of control has been raised, but it's not an issue. We are happy that the structure we have devised gives us adequate control".
Kerry Co-op will hold two special meetings in the next couple of months where the proposed rule changes will require 75 per cent approval.
When asked by a shareholder whether the reduction in the co-op stake from 52 per cent to 39 per cent would inevitably lead to the co-op losing control of the group, Mr Brosnan said. Control is too emotional a term. I have always said that having the organisation functioning well is much more important than who has 50, 40 or 30 per cent."
Mr Brosnan also reassured local shareholders that the future of the Kerry based dairy business would be secure. Included in the rule changes will be an option where Kerry Co-op can buy back the Irish dairy business from the group. "Nobody sees that option being triggered for a very long time," said Mr Brosnan. He added that the current value of the dairy business was about £15 million to £20 million.
Mr Brosnan also rejected a suggestion from one shareholder that the group was in danger of becoming over exposed to the food ingredients business. This business accounts for well over half of group turnover of £1.2 billion and almost three quarters of the £83 million operation profits.
"As long as the fast food business grows, then so will the demand for specialised food ingredients. We're backing our judgment that fast food will continue to grow for a long, long time. There's plenty of room out there".
Mr Brosnan denied suggestions that Kerry's existing corporate structure had restricted its ability to make acquisitions. "We haven't walked away from anything because of money".
He added "Our next big move in ingredients will be out of Australia into the Far Eastern market. McDonald's is planning 500 to 600 outlets in China alone. We have to follow our major customers.
The expansion of the ingredients business in the Far East will more likely come through a number of small acquisitions, not a DCA type major acquisition, he said. "It's a huge market for us."
