independent

Thursday 17 April 2014

Shareholders set to support Glanbia deal

Glanbia Co-op shareholders are expected to back a proposal to sell 3pc of the co-op's stake in Glanbia Plc and use the funds to establish a new joint venture company.

A vote involving 7,800 co-op shareholders takes place today, with 12 polling stations being manned throughout the day at various locations in the east and southeast of the country.

Farmers involved in the campaign predicted yesterday that the 'yes' camp would carry the vote but suggested that the 'no' vote could be close to 40pc.

If the move gets the green light, the joint venture – to be known as Glanbia Ingredients Ireland (GII) – would be owned on a 60pc to 40pc basis by the co-op and plc respectively.

GII would own the milk-processing business of Glanbia's Dairy Ingredients Ireland (DII) division and would also fund the construction of a new milk-processing facility at Belview Harbour, near Waterford Port.

Appealing for shareholders to back the proposal, Glanbia chief executive John Moloney said the plan came "with a strong recommendation from the society board and farming bodies".

"The joint venture is the most effective structure to optimise milk price by giving members and future generations of farmers vital control of the milk-processing business," Mr Moloney said. "Also, it means that the plc can continue to grow the value of its international businesses, thereby maximising the value of the investment of the society and its members in the plc," he added.

However, four board members – Brendan Hayes, Pat Gleeson, John Murphy and Robert Prendergast – remain opposed to the joint venture plan and have received strong support from shareholders, particularly in Wicklow, Wexford and west Waterford.

The four have not made any public statement on the plan since issuing a statement setting out their position in the Farming Independent last Tuesday.

There have been suggestions that four have been silenced, but this assertion was rejected by Glanbia.

"We strenuously refute any suggestions of board members being gagged," a Glanbia spokesperson said.

The four dissident board members have articulated concerns shared by many shareholders in the co-op. They have questioned why Glanbia Co-op should reduce its stake in a very profitable global operation to buy the poorest performing element of the business.

They also asked why the consumer foods elements of Glanbia's Irish business and agri-trading arm had not been included in the deal. The level of debt to be carried by the joint venture was also cited as an area of concern.

Opponents of the deal have also complained that the same level of information was not given to co-op shareholders as was made available to institutional investors.

The complaint centres on the fact the six plc representatives on the joint venture board will have 1.5 votes each, compared with one vote for each of the 14 farmer board members.

While those making the complaint accepted that the weighted voting for the plc representatives was necessary to reflect the 60:40 co-op/plc shareholding, they maintained that this information was not made available to

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co-op shareholders.

A letter of complaint on the issue has been sent to both Glanbia Co-op and ICOS.

Opponents of the deal were also angered by literature calling for a 'yes' vote being included with shareholders' ballot papers.

The complaints and counter- claims from both sides of the debate reflect the passions that it has aroused. One farmer said the campaign had been "dirty and divisive".

Meanwhile, Glanbia has rejected suggestions that a further ballot of co-op shareholders – required to clear the way for the co-op to reduce its stake in the plc to 43pc – might not go ahead if the joint venture proposal was not emphatically endorsed in today's shareholder vote.

A Glanbia spokesperson said the first of two planned special general meetings to deal with this issue will go ahead on November 28 if the joint venture vote was passed.

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