Vote on GII's Wexford bid goes to the wire
Published 04/12/2013 | 02:30
The decision on whether Wexford Milk Producers (WMP) should sell their processing plant and milk pool to Glanbia Ingredients Ireland (GII) looks set to go down to the wire at the vote in the Talbot Hotel in Wexford town tonight.
A late submission on why farmers should reject the deal has been circulated by WMP board member Padraig Doyle.
The dairy farmer from Caim, outside Enniscorthy, has financed an analysis of the deal by Tipperary-based agricultural consultants Martin & Rea.
The conclusion of the report is that WMP shareholders should reject the GII proposal to pay €3.7m in cash and €16.3m in redeemable shares, which can be sold back to GII in 2023.
The authors of the report argue the 4pc dividend payable on the shares from year six to year 10 would only offset inflation on the money, and the real value of the offer was closer to €14.7m in today's terms.
The report says Wexford Creamery has cheese stocks worth over €13.3m, leading to the report's conclusion that the cheese plant is passing to GII free of charge. It claims that by valuing the 107m-litre milk pool at the same rate as that of Newmarket Co-op in Co Cork at the time it was bought by Kerry Group, a price of €32m would be put on total assets.
The authors also dismiss worries about finding an alternative buyer. "In both the Newmarket and Donegal deals value was secured without a competing bidder," it said.
It also claims that there are two other potential buyers.
The analysis shows the average Wexford milk price has been just 0.2c/l lower than the Glanbia price over the last eight years.
But WMP chairman Marty Murphy hit back at the claims, describing them as 'regrettable' and 'speculative' in a statement issued over the weekend.
"The long-term commercial damage that could arise from this analysis doesn't bear thinking about," said Mr Murphy.
"The deal proposed is a good deal for WMP milk suppliers, in terms of milk price equalisation, a fair price for the creamery, long-term processing security, a reduction in co-op levies and access to capacity expansion. The overall financial benefit for the average supplier is €8,469 per annum and the once-off dividend payable will average over €5,000," said Mr Murphy.
Mr Murphy said a viable future for dairy farmers in Wexford could only be provided with GII as milk processing partners.
The IFA, ICMSA and ICOS have all endorsed the proposal.
Defending the late arrival of the Martin & Rea report, Padraig Doyle said he wanted to ensure the analysis contained all the latest information.