Dairy Crest seeks golden share

THE Milk Marketing Board wants its milk delivery and cheesemaking business, Dairy Crest, to be bid-proof for five years when it is hived off in a pounds 300m stock market flotation in 1994.

The request for a 'golden share' for Dairy Crest is contained in the MMB's proposal to transform itself from a statutory monopoly to a voluntary co-operative, published yesterday.

Bob Steven, MMB chairman, said a golden share was necessary to prevent Dairy Crest being taken over in its vulnerable first five years as an independent company. He denied this would depress the share price.

The MMB, advised by Schroder Wagg, considered and rejected a two-tier share structure that would give dairy farmers perpetual control.

Mr Steven said dairy farmers would be allocated about 60 per cent of an enlarged Dairy Crest. Between pounds 75m and pounds 125m of fresh money would be raised by issuing new shares on flotation.

The 29,000 dairy farmers in England and Wales would be allotted shares on the basis of their milk production over a qualifying period. This could be 'the average of, or the best of, the last three years,' Mr Steven said.

The MMB proposal to dismantle itself is in response to government pressure: it plans enabling legislation on reforming the MMB this autumn.

Under the MMB proposal, farmers would be free to sell their milk to anyone. At present they have to sell it to the MMB. There would be 'reasonable terms' for farmers wanting to leave the voluntary co-operative. However, Mr Steven said farmers would probably have to give 12 months' notice - a restriction opposed by the European Commission.