Board of food firm to delay merger decision

THE board of Waterford Foods plc will today consider the terms of the proposed merger with Avonmore, which would create a £2.5 billion dairy and meat group.

The board meeting will be followed by a meeting of the 35 member board of Waterford Co op tomorrow. But industry sources believe the company is unlikely to reach a decision until later this month on the merits of the £281 million takeover offer.

The plc board is made up of 13 directors, which include farmer representatives Waterford Food chief executive Mr Matt Walsh; and finance director Mr Michael Dempsey. Mr Dempsey is believed to be discussing his future at the group with other members of senior management and is understood not to have attended the previous plc board meeting, held last week.

Discussions between legal representatives of Waterford Foods and representatives of Mr Dempsey are believed to be ongoing.

Avonmore has told Waterford Foods that it would proceed with a formal offer to its shareholders, which would include milk price improvements worth an average of £4,000 a year and free shares worth around £3,600 as part of its takeover bid.

The proposal is estimated to be worth up to £40 million to Waterford milk suppliers.

Waterford Co op has been holding a series of regional meeting with its members in response to Avonmore proposals. The bid has received a hostile response from some of the farmers, particularly those bordering Avonmore's catchment area.

In a surprise move this week, the Cork dairy co operative, Dairygold, signalled that there could be scope for a possible formal link up between it and Waterford.

Institutional investors are taking the view that Avonmore's bid has only a 50/50 chance of being accepted.