A Golden Vale Co-operative bid to purchase the Charleville, Co Cork milk processing plant, now owned by Golden Vale plc, has been rejected.

The board of the plc considered the £22 million (€27.93 million) offer at its meeting last Friday and is understood to have decided against selling at that price. The offer was made in the last four to six weeks following the announcement earlier this year by the Golden Vale plc, chief executive Mr Jim Murphy, that he intended to dispose of the facility. Selling it back to the co-operative was one of three options suggested by him at the time. While it is understood that negotiations between a sub-committee of the co-operative and the plc are still continuing, it is not clear if, or when, the co-operative will be allowed to make another bid.

Since Mr Murphy announced his decision to sell off the then loss-making plant, which produces butter and skim milk powder, world markets for these commodities have improved significantly.

A statement issued by the Golden Vale Co-operative subcommittee last week made it quite clear that in the event of its offer being rejected, the milk suppliers would demand a milk price above the weighted average of the milk audit. But they are not believed to be looking for a premium like the 3p per gallon which caused Glanbia plc difficulty. There is a fraught relationship between the plc and the co-operative in Golden Vale. While the co-operative shareholding in the plc is only around 0.2 per cent, and unlike over 50% in Glanbia, for example, a number of vetoes have been inserted in the agreement between the two in Golden Vale. This gives the co-operative considerable influence over decisions on acquisitions and disposals by the plc.