Members of Dairygold have voted to separate the dairy cooperative’s assets, forming a new plc from non-core retail, consumer food and property businesses.
The decision, Dairygold spokesman Emmet Barrett told just-food, was prompted by a number of factors.
“Firstly, dairy farmers are facing challenging times in Ireland, with the ongoing review of EU support for dairy produce and a further round of WTO talks scheduled. Many farmers have found themselves requiring an additional off-farm income,” he explained.
Over a number of years, Barrett continued, the cooperative had diversified into consumer foods businesses, primarily dairy and meat, retail, with the ownership of the 4Home chain, and property.
“These non-core businesses all have massive growth potential, unlike dairy farming. Farmers can only produce and sell so much milk because of quotas. In order to realise the potential non-core growth funding is required,” Barrett explained. “Many companiess in Ireland have gone the floatation route – but then found that the management is torn between the interests of shareholders and farmers.”
Dairygold decided not to take that route and, after a period of consultation, came up with a new plan.
“Core activities will be ring-fenced, protected as it were, from the financial needs of the other businesses,” Barrett explained.
“Dairygold members decided to form an unlisted plc that will not appear on a stock exchange.
“The cooperative didn’t dilute the ownership of Dairygold assets. The new company, called Reox, will be divided between current members, who will receive 75% ownership, and the rest will go to the cooperative itself, which will be the biggest stakeholder. Members are now free to trade on those shares,” Barrett said.
Reox is worth approximately EUR200m (US$256.33m), while Dairygold retains assets of EUR200m and financial assets – shares in other listed companies – valued at and additional EUR100m.