GIIL bids €20m for Wexford
A purchase price of €20m has been offered by Glanbia Ingredients Ireland Limited (GIIL) for the purchase of Wexford Creamery.
The offer is part of a proposed deal between GIIL and Wexford Milk Producers (WMP), who own 70pc of Wexford Creamery.
The full package, which will be outlined to WMP's 150 dairy farmer shareholders at a series of meetings over the next week, will involve the €20m being paid in redeemable preference shares in GIIL.
A further €2m in cash is understood to be on the table to buy out the remaining 30pc shareholding in Wexford Creamery from British firm Dairy Crest. However, this will be clawed back from WMP suppliers in the form of a 0.5c/l levy over three to four years.
Under the terms of the proposed agreement WMP will enter a 15-year milk contract with GIIL and with each individual supplier. Suppliers have until the end of December to sign the contract with GIIL. After that, penalties of between 0.5c/l and 1.0c/l will be imposed on suppliers. Wexford suppliers are to receive a gross milk price equal to that of GIIL manufacturing milk suppliers.
In terms of expansion, the reference volume for future supplies will be each individual Wexford shareholder's milk quota on April 1, 2013, plus an additional 50pc.
Any farmers who exceed their reference volume will be subject to the charges levied on other GIIL suppliers. This is a 2c/l contribution to a five-year revolving fund.
Interestingly, WMP will be treated as a Glanbia Society region, but the proposed agreement will not carry a seat on the board of GIIL.