Plans to sell a major part of Donegal Creameries have hit the rocks.
Talks with Connacht Gold over the sale of Donegal Creameries’ dairy division to the large Sligo-based co-op ended without agreement last night.
The discussions about a possible deal have been taking place behind closed doors for a number of weeks.
News of a possible sale between the two companies was broken by Donegaldaily.com a number of weeks ago.
Donegal Creameries’ dairy division, which accounted for 46 per cent of the company’s turnover last year, has been struggling in recent times.
Results for the company for the first six months of this year have show that Donegal Creameries made a loss of €970,000 compared to a profit of €350,000 for the same period last year.
Donegal Creameries’ agri-inputs and seed potato business saw a strong improvement in profits during the same period.
The company owns a number of agri-stores around Donegal including Letterkenny, Kerrykeel, Killygordan, Lifford and Creeslough.
While a number are trading well, it is believed a number of the stores are struggling.
The company, which has been listed on the Iseq’s junior exchange since 1997, already supplies milk to Connacht Gold and other co-ops, as well as manufacturing its own liquid milk and yoghurt products.
It has previously indicated its support for greater consolidation in the dairy industry, a policy endorsed by the Icos (Irish Co-operative Organisation Society).
Sligo-headquartered Connacht Gold is one of the largest co-operatives in the State.
Formed in 2000 following the merger of two Connaught-based co-ops, it had turnover of €300 million in 2010, up from €264 million the previous year.
Pretax profits rose to €5 million in 2010 from €1.8 million in 2009, due in part to the disposal of property.
Connacht Gold has previously indicated its interest in pursuing acquisition opportunities in 2011.
Donegal Creameries closed unchanged at €3.20 yesterday evening in Dublin.
Tags: