AVONMORE Co-op has offered milk price improvements worth an average of £4,000 a year and free shares worth an average of £3,600 to Waterford Co op shareholders as part of the takeover bid that could create Ireland's biggest dairy company.
Details of the proposals were issued late last night and, according to one source close to Avonmore, the "farmer element" of the takeover is worth up to £40 million to Waterford milk suppliers, at a time when their incomes are set to fall further because of cuts in the price they get for milk.
Avonmore has made its offer conditional on getting the support of the Waterford board. It is understood some sections of the board expressed deep misgivings at meetings last Friday about the very principle of combining with Avonmore. Industry sources have indicated, however, that the board will need to provide its shareholders with a clear alternative strategy if it comes out against the proposals.
Waterford, however, has made it clear that it will not be rushed into making an early recommendation on the proposals which Avonmore has said values Waterford at £281 million when the various components of the offer are taken into account. The Waterford Co op board meets on Friday when it is likely to receive a detailed assessment of the offer from its own consultants.
If the Waterford board does recommend the offer, then the proposals would have to go before two separate special meetings of the co op's shareholders, where 75 per cent votes in favour would be required for the takeover to proceed.
Some sources have indicated that, even if the Waterford board does endorse the proposal, 75 per cent target might still be difficult to achieve given local fears over loss of independence and Waterford's junior partner position in the combined group.
But even with its choice of name for the merged company, Avonmore Waterford Group, Avonmore has gone out of its way to try to persuade Waterford shareholders that their identity would be maintained and that their interests would be fully represented.
Even though the financial details show that Waterford would have no more than 36.5 per cent of the proposed merged group, the board of the new co op would have an equal number of firmer representatives from Avonmore and Waterford.
The proposals published last night do not, however, go into any detail on the sort of rationalisation that will be needed to provide the estimated £15 million annual cost savings.