The 10,500 members of Kerry Co-op are to receive an average of €9,600 worth of Kerry Group shares after 6.4 million of the plc shares held by the co-op are distributed to members in the next few weeks.

This latest spin-out of plc shares to Kerry Co-op members means that the co-op stake in the plc will fall from 34.6 per cent to 31.2 per cent. But once the plc shares held individually by co-op members are taken into account, it is thought that about 50 per cent of the plc shares are held within the county.

With no new shares being issued, the planned spin-out of 6.4 million shares by the co-op - a tenth of its total holding - had no impact on the Kerry share price which was unchanged yesterday at €15.00.

At this price, the 6.4 million shares are worth €96 million while the value of the co-op's 31.2 per cent stake in the plc is €860 million - or an average of €82,000 for every one of the co-op's 10,500 members.

But apart from the shares held centrally by the co-op, an estimated 20 per cent of the plc shares are held individually by co-op members and these are worth about €550 million at the current share price or an average of more than €50,000 per co-op shareholders.

It is thought, however, that there is a wide disparity between individual shareholdings in the plc, with some of the larger milk suppliers undoubtedly owning shares worth hundreds of thousands of euro. Kerry Co-op members own co-op shares in proportion to the volume of milk they supply.

It is understood that former Golden Vale shareholders will not qualify for a distribution of shares under the latest spin-out. But they will qualify if the co-op transfers more shares in the future, as they will in future receive one co-op share for every 1,000 gallons of milk they supply.

This is the third time that Kerry Co-op has spun out plc shares to its members. In 1993, a 5 per cent holding in the plc was distributed while in 1996, some 21 million shares - 13 per cent of the total plc equity - were distributed in a move that saw the co-op stake in the plc fall from 52 to 39 per cent.

Most of these shares have stayed in the same hands, and it is thought that not much more than 5 per cent of the shares distributed to co-op members have been sold by the co-op members.

"Farmers don't sell shares," commented one source close to the company.

Since the 1996 restructuring, the co-op can reduce its stake in the plc to a minimum of 20 per cent without getting approval from its members.

While technically the sale of another portion of co-op-owned shares improves the liquidity of Kerry Group and increases the free float to close on 70 per cent, the reality is that the free float is closer to 50 per cent when the farmer-owned shares are taken into account.

The only way that Kerry Group itself can directly improve liquidity in its shares is to issue new equity, and the group has shown little inclination in the past to dilute existing shareholdings by selling new shares to institutional investors.

Kerry's €1.5 billion-plus worth of acquisitions in the past decade have been funded from debt, and that is likely to remain the strategy in the future.

The company's managing director, Mr Hugh Friel, recently said: "We have to keep our pencil sharp for future opportunities."