THE general view in both agricultural and stock market circles is that the revised proposals to merge Avonmore and Waterford shareholders will be approved by both co-ops, but that approval of the merger is by no means a certainty.
The fact that some of the Waterford Co-op opposed the merger at Monday evening's marathon meeting of the Waterford Co-op board shows that there is a sizeable minority faction among the co-op shareholders which seems opposed to any merger with Avonmore, irrespective of the terms on offer.
Analysts in Dublin felt that the enthusiastic endorsement of the revised Avonmore offer by the majority of the Waterford plc and co-op boards should mean that the merger would get the 75 per cent majorities required from both sets of co-op shareholders.
But they also stated that the prospects of getting the required votes were "at best 60-40". "There will be no landslide on the Waterford side for this deal," commented one informed source.
"There is going to be a sizeable rump who are going to oppose this deal," said Riada analyst Mr Joe Gill. He added, however, that the majority on the Waterford hoard which approved the merger proposal was likely to mount an intensive campaign to make sure that every one of Waterford's Co-op 5,500 shareholders was aware of the details of the offer.
The hoard will try to ensure that the Waterford shareholders actually get out and vote in the two special meetings.
It will be fully aware that those opposed to the merger will undoubtedly mobilise their own forces to vote no and that getting the 75 per cent vote could he a close-run thing.
Last year, senior management of Kerry Co-op had to actively campaign for a yes vote for the restructuring of the co-op/plc relationship. But even that restructuring which put £130 million worth of free shares directly into the hands of Kerry Co-op's 6,000 shareholders, was passed by just 80 per cent, not a huge margin over the 75 per cent required.
If the deal goes ahead and the biggest merger in the Irish dairy industry does take place, it will have reverberations far beyond the two co-ops' catchment areas. The savings that Avonmore and Waterford believe they can generate, and the support for the price paid for milk, will put severe pressure on other processors to follow suit. "This could be just what is needed to get rationalisation on the move," said one source.
The other co-ops which are most likely to follow suit are the two from Cork, Golden Vale and Dairygold.
Golden Vale was at one time involved in talks with Mitchelstown and Ballyclough to create a three-way merger of Cork co-ops, hut pulled out mainly because it could not agree on how the merged co-op would he structured.
THE new Golden Vale chief executive, Mr Jim Murphy, has made it clear that he is prepared to consider merging with another group, if the root and branch review of Golden Vale's operations points in that direction.
Dairygold, likewise, is likely to be happy to link up with its Cork neighbours, although such a merger would have to overcome the same local sensibilities as the Avonmore/Waterford merger.
A successful merger of Avonmore with Waterford would also increase the pressure on the second-tier co-ops and there is every likelihood that the likes of Lakeland and Tipperary would seek a merger with their larger neighbours.
Plans to merge the four west Cork co-ops - abandoned three years ago after they were rejected by some of the co-op share-holders - might also he resurrected as might the plans to merge the three co-ops in the west, NCF, Midwest and Kiltoghert.
