A deal on a potential merger between Tipperary Co and Arrabawn Co-Op might be agreed before Christmas.
Exploratory talks are now said to be exclusive between the two organisations with a view to a consolidation of operations.
It is understood that there was also some interest from Tirlán as the milk supply from the Tipp Co-Op is much sought after to optimise processing facilities.
The situation at Tipperary Co-op is difficult as despite having significant processing assets the Co-Op has extensive borrowings and is not able to pay suppliers a top price for milk.
The Co-Op is understood to have borrowings of €31M in long term loans and also €22M in other liabilities.
The trading position has been adversely affected by lower than expected milk intake and high energy costs especially since 2022.
The Advisory Board met on Wednesday night(Sept 4th) and indications are that the 2023 financial reports will show a Group loss of over €6M in stark contrast to a €6.8M profit reported for 2022.
The mood at the meeting was said to be realistic in that a deal with Arrabawn could effectively keep the Tipperary town processing plant in operation while other options could see the facility idle.
The Co-Op is expected to hold it’s Annual General Meeting in the next few weeks which will enable all members to be briefed and to have an opportunity to indicate their position.
If both Co-Ops can agree a deal it is not thought likely that the Competition Authority would oppose the amalgamation.
Details around how member’s shareholdings would be reflected in the new entity have yet to be agreed.
It is understood that the name “Arrabawn Tipperary Co-Op” is under consideration as the new name.
Staff at Tipp Co-Op have taken pay cuts and redundancy or early retirement as part of cost cutting measures – this support was acknowledged by the Advisory Board at Wednesday’s meeting in Ballykisteen.
Staff numbers are now thought to be in the region of 170 – down from 205 as per the 2022 Annual Report.
