Farm Ireland
Independent.ie

Saturday 24 June 2017

Farmers now in line for €10,000 Glanbia payout

Almost 15,000 Glanbia Co-op farmers will split a €105m windfall if the deal goes ahead, with active dairy farmers set for an average payout of close to €11,000. Photo: Finbarr O'Rourke
Almost 15,000 Glanbia Co-op farmers will split a €105m windfall if the deal goes ahead, with active dairy farmers set for an average payout of close to €11,000. Photo: Finbarr O'Rourke
Independent.ie Newsdesk

Independent.ie Newsdesk

Farmers will share average windfalls of more than €10,000 if they back plans to create a €1.5bn business involving Glanbia's Irish consumer brands.

Almost 15,000 Glanbia Co-op farmers will split a €105m windfall under a plan hatched to create a new €1.5bn business that will include Glanbia plc’s consumer brands such as Avonmore and Kilmeaden.

The deal will create Ireland’s biggest dairy company.

Glanbia plc – the €5.2bn stockmarket-listed company that is 36pc-owned by the Co-op – revealed plans yesterday to create a new entity called Glanbia Ireland.

Under the plan, the Co-op would pay €112m to Glanbia to secure a 60pc stake in Dairy Ireland, whose assets would then be transferred to Glanbia Ireland – which include Glanbia’s Irish consumer foods business, as well as its Irish agribusiness unit. 

Glanbia Ingredients Ireland, a joint venture between Glanbia and the Co-op, will also become part of Glanbia Ireland.

At least 66pc of the Co-op members will have to vote in favour of the deal for it to be approved. Glanbia shareholders also have to agree to the plan. That vote could take place by May and the deal could be cemented by June.

Glanbia’s Dairy Ireland business generated revenues of €616.2m last year and earnings before interest, tax and amortisation (EBITA) of €30.7m. Glanbia Ingredients Ireland has revenue of €836m.

Glanbia Co-op will have to sell a 3pc stake of its 36.5pc holding in Glanbia plc to fund the transaction. Those proceeds will also be used to help create a €40m members’ support fund.

It will also hand over a 2pc stake to its own members.

Glanbia Co-op said that about 5.9 million Glanbia plc shares will be split between its 14,773 members. Based on a price of €17.13 per share, that will see members with an average shareholding receive about €6,600 worth of shares. For active dairy farmers, the average windfall will amount to nearly €10,800. Glanbia shares rose to €17.84 yesterday.

The newly-created Glanbia Ireland will process over 2.4 billion litres of milk a year, and export to more than 60 countries.

The plc and the Co-op tried to do the same deal back in 2010, but it didn’t secure the 75pc approval of Co-op members that was required.

Glanbia ceo Siobhan Talbot told the Irish Independent that the landscape has changed significantly since then, and that she was confident the transaction will succeed this time around.

“An awful lot has changed since 2010,” she said, pointing to the 2012 deal the plc and the Co-op did to create Glanbia Ingredients Ireland.

“At a fundamental level, the growth ambitions of our supply base and the Glanbia organisation itself has evolved an awful lot in that intervening period.

Ms Talbot was speaking as Glanbia reported strong full-year results, with revenue from wholly-owned businesses rising 2.7pc to €2.8bn, and group EBITA rising 12.6pc to €349.8m.

Irish Independent