Having witnessed Golden Vale farmers in action at the company's annual general meeting a few weeks ago, Current Account can only wish Denis Brosnan and Hugh Friel well if Kerry's €252 million (£198 million) bid for Golden Vale is ultimately successful. Certainly, Kerry's own annual meetings - which are veritable love-ins between farmers and the company - are unlikely to be the same once the wild men from Limerick and north Cork start turning up and making a lot of noise.
The initial noises from the Golden Vale farmers in favour of the Kerry bid have now turned into opposition from some powerful quarters. But how much of this megaphone diplomacy from the Golden Vale farmers is pure posturing and what is their alternative if, at the end of the process, Kerry does not get enough acceptances to close the deal?
There have been some suggestions from Golden Vale farmers that Kerry's offer to pay Golden Vale suppliers the same milk price as Kerry farmers is not enough and that they want some sort of sweetener. This in turn has been ruled out by Kerry and it is simply inconceivable that Kerry should treat Golden Vale milk suppliers more favourably than its own suppliers. That would simply not wash with its own suppliers who would prefer to see Kerry walk away from such an arrangement.
The price for milk might be the be-all and end-all for Golden Vale milk suppliers, to the almost total exclusion of the price of their shares. But those milk suppliers will need to think carefully before they reject the Kerry proposal and will have to consider what alternative they can put into place that will offer them a premium price for their shares and a guarantee to operate a common milk price for all farmers supplying the enlarged Kerry with milk.
If, however, Golden Vale milk suppliers - who control 12 per cent of the shares - do decide to play hardball and prevent Kerry getting sufficient acceptances to buy them out, then they better be aware that their alternatives are limited.
For a start, if the bid falls for lack of support, the Golden Vale board, which is recommending the Kerry offer, would have no alternative but to resign en bloc. Finding new management to replace Jim Murphy and Liam Irvine would be extremely difficult given the personal abuse that Jim Murphy, in particular, has received in recent months. And not least, the Golden Vale share price would sink like a stone, probably to well below what it was before the Kerry approach was made public. The prospect of milk suppliers controlling the destiny of Golden Vale plc would be enough to send other shareholders flocking to the exits.
At the Golden Vale a.g.m., a sizeable group was pining for the days when the company was a co-op, where it did not have to worry about anything but the price of milk. Neighbour Dairygold has shown that large co-ops can exist quite contentedly and co-operatively alongside the big plc dairy processors. But there is no way to turn back the clock and convert Golden Vale plc back to a co-op, and the prospect of buying the Charleville milk plant is now off the table after Hugh Friel made it clear that Charleville is an integral part of the Kerry bid.
It's time for some mature thinking in Limerick and north Cork. The Kerry offer may not be perfect but it is the only one on the table and does look after the interests of all (our emphasis) shareholders. Kerry's own milk suppliers have lived happily with Kerry Group ever since Kerry went public 15 years ago. There is no reason why Golden Vale milk suppliers cannot do likewise.
