KERRY GROUP is to acquire Newmarket Co-op for €33 million subject to shareholder approval. The official offer comes after more than six months of negotiations between the PLC and the North Cork co-op.

Kerry are paying €421 per share, valuing the business at €26.6 million. In addition the company is also acquiring debt of €5.9 million plus transaction costs.

Co-op members are set to net between €38,000 and €39,000 through the deal, which needs 66 per cent shareholder approval.

Changes to the proposed rules of the co-op will also be required in order for the deal to be passed. It is widely expected that the deal will be endorsed by shareholders at a Special General Meeting of Newmarket on September 2nd, 2010, with Kerry concluding the deal by September 10th.

The purchase is subject to regulatory approval.

Newmarket Co-op has 680 shareholders, 150 of whom are milk suppliers. Under the deal, which contains no milk price assurances, milk suppliers are being offered an allotment of 5,694 additional shares worth €1 each based on milk quota held by suppliers to Newmarket in the 2009/2010 quota year.

Newmarket has been a major supplier of cheese to Kerry’s branded cheese business since Kerry took over Golden Vale in 2001. In addition it supplies large volumes of cheese to the Irish Dairy Board.

Turnover at Newmarket was €56.6 million in 2009, with the co-op posting profits of €746,000 last year. The co-op has invested approximately €17 million in its cheese-making plant at Newmarket in the past two to three years. The plant has manufacturing capacity of up to 35,000 tonnes, but is currently running at about half of this. It is understood that Kerry intends to increase production at the plant.

In addition to its high-end manufacturing plant, Newmarket also owns the SuperValu shop in the town of Newmarket.

Kerry’s chief executive Stan McCarthy said: “Combining Kerry and Newmarket represents a positive growth and business development opportunity in the interest of all stakeholders in both companies.”