independent

Wednesday 23 April 2014

Money talks in key Glanbia vote next week

The campaign relating to Glanbia's joint venture proposal is now entering its crucial final week. All the indications are that the vote will be carried, although by a fairly tight margin.

The consensus among shareholders is that the lure of a cash windfall from the share spin-out will sway a lot of shareholders, particularly non-dairy farmers.

Given that this vote requires a simple majority, the manner in which the non-milk suppliers vote will be crucial, as will be farmer turnout for the ballot.

Close to 7,765 Glanbia Co-op shareholders are eligible to vote. As Glanbia has around 4,400 milk suppliers, this means there are 3,350 dry shareholders. And it has to be presumed that the bulk of these will vote for the deal.

Indeed, one man opposed to the proposal said a dry shareholder admitted to him last week that he was not voting for the proposal but he was voting for 'the money'.

The fact that the initiative has received the backing of the ICMSA and the tacit approval of IFA will add some weight to the yes side.

However, it is understood that serious reservations were expressed at the meetings of both organisations regarding the deal. One farmer representative maintained that the organisations were left with no option but to support the initiative, given that no 'Plan B' appeared to be on the table for the processing of additional milk post 2015.

This opposition was also reflected in the heated exchanges at local information meetings and by the fact that four board members are resolutely against the changed structure.

If the Yes side wins the day in next week's vote, then the battle will begin in earnest to convince shareholders to go the whole way and take the co-op's stake in the plc below 50pc.That will be a far more difficult battle.

But the suspicion is that the plc will be able to play the 'long game' this time around.

Any future requirement for additional funding for the joint venture or farmer pressure on the new entity to purchase Glanbia's agri-trading division would force the co-op shareholding below 50pc.

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