Merger is a great opportunity
The opportunity for Arrabawn from the merger with Tipperary Co-operative Creamery to provide the scale and resilience needed in an uncertain market will not come around again, former board member and well-known local farmer Michael Kennedy has stated.
Speaking following the recent Arrabawn area meeting in Nenagh at which members received a full briefing on the merger, including the outcome of detailed due diligence by independent experts, the Nenagh-based farmer said that it’s a one-off opportunity.
“Personally, I’ve no doubt but it’s the right thing to do at the right time. It’s a perfect fit for us in that it’s right beside us. If you were a farmer looking or needing to expand and a farm came up beside you, then you’re definitely going to go for it because it makes much more sense than going for something that’s miles away. This is the same.
“We will simply not get the opportunity again to merge with a similar sized neighbouring co-op. So, all the synergies we have, all the benefits that will come from product diversity are great but because we are neighbouring co-ops it makes absolute sense. If we didn’t go for this, we’d be kicking ourselves for ever and a day.”
On the specific synergies, he said: “Tipperary’s milk pool is going to fit in perfectly with ours, with efficiencies across milk collection also. They will give us a broader product mix on top of what we already have and that’s crucial. We have done exceptionally well over the last decade but are very dependent on Casein and Kerrygold butter as our two main products.
“The diversity we are going to get collectively from combining the two product ranges is something that would take us years and a lot of expense to develop but we will now have this instantly. We will also grow our agri division.
“Tipperary also has its very successful cheese business, Tippagral, in France and that’s another big asset. As is their plant, which is a modern, high-tech facility. That’s an awful lot of pluses and we would be very wise to proceed, not least given this opportunity won’t come around again.”
Kennedy, however, said that it’s not a case of sugar coating what’s ahead. “There is no such thing as a perfect amalgamation opportunity, but this is a very good fit. Tipperary has debt but we’ve listened to experts on this and the debt is manageable. On its own, the debt is challenging but our management and auditor have advised us that in the bigger co-op it will be much more manageable.
“Also, we are no strangers to debt ourselves. We invested heavily as a co-op nearly a decade ago. It was an investment for the future and it brought us to a better place. That shows that proper investment does pay off, but it also shows a track record on our side of making good decisions and this merger is going to be a good decision.”
He added: “Ultimately, there is an awful lot of compatibility here. We both want a good milk price for our product, we’re in really strong dairying country and the synergies are really good.
“A big thing for me also is that we will retain control. Consolidation in the industry will continue and if in years to come we ended up being subsumed into a bigger co-op, then we will lose control as farmers. But as things stand, we are shareholders and will remain shareholders with collective decision-making capability in the new structure, a stronger and bigger structure.”
SPECIAL GENERAL MEETINGS
The recommendation to merge will now be put to the respective shareholders of both co-operatives at Special General Meetings to be held on Thursday, November 7, next. The merger is also subject to regulatory approval.