LacPatrick to update rivals on bidding process
Monaghan-based co-op seeks strategic partner as it struggles amid falling milk prices
LacPatrick chief executive Gabriel D’Arcy. Glanbia, Lakelands, Aurivo and Dale Farm have all expressed interest in the co-op. Photograph: Enda O’Dowd
Troubled dairy co-op LacPatrick will send details of the business to potential bidders this week, it is understood.
Monaghan-headquartered LacPatrick said last month that it would seek a strategic partner for the business, which has been under pressure since the autumn in the face of falling milk prices.
LacPatrick did not comment on the latest stage of the sale on the basis that it was “engaged in a confidential commercial process”.
The four bidders emerged shortly after the co-op’s chairman, Andrew McConkey, announced that LacPatrick was seeking “partnerships, joint ventures or mergers or other other opportunities”.
Although it has not commented, Cavan-based Lakelands, which has a strong balance sheet, is understood to be a potential bidder for LacPatrick and its 600 million-litre milk pool.
Industry sources see it as a natural front-runner, particularly on the basis that LacPatrick’s and Lakelands’ territories overlap in some places.
Lakelands previously attempted a merger with Co Derry-based co-op Ballyrashane, which went on to merge with Monaghan Town to form LacPatrick in 2015.
Belfast-based Dale Farm, ranked as the UK’s biggest co-op, is believed to have contacted LacPatrick shortly after Mr McConkey made his statement.
Much of LacPatrick’s milk comes from farms north of the Border, a factor that could make the Belfast player an attractive suitor from the co-op’s members’ point of view.
Dale Farm did not confirm that it contacted its rival, but its chief executive Nick Whelan, said following Mr McConkey’s announcement that “we have an interest in these developments”.
Co Kilkenny-based Glanbia is also thought to be an interested party. Sligo-based Aurivo, formerly Connacht Gold, is also thought to be a good match for LacPatrick, as the two make similar products, but it will have to prove it has the financial firepower to undertake the transaction.
LacPatrick cut the price it paid farmers for March milk deliveries by two pence sterling to 25p a litre in Northern Ireland and by 2.5 cent to 30.25 cent a litre in the Republic, blaming a weak market.
Its 2016 accounts show that bank debt grew by more than €13 million to €30 million, with the long-term element of this doubling to €16.9 million.
LacPatrick increased borrowing to invest in its business, including building a drier for powdered milk manufacture at Artigarvan, Co Tyrone, which cost €40 million. Its main lender is Danske Bank.
LacPatrick trades on both sides of the Border, buying five out of every six litres of milk that it processes from farmers in Northern Ireland.