Glanbia farmers to vote on joint milk processing venture
GLANBIA'S farmer shareholders will vote in three weeks' time on whether a proposed spin-off of the company's milk processing business will go ahead.
The farmer-controlled Glanbia co-op is in negotiations with Glanbia plc, the food group it part owns, about a proposed joint venture (JV) to run milk processing ahead of the end of EU quotas on milk production in three years' time.
Under the proposal, the JV will be split 60:40 between the co-op and plc, and a new milk processing plant will be built at Belview Port on the Waterford-Kilkenny border.
Yesterday, the two sides agreed a contract for the joint venture -- but the co-op shareholders will vote on November 13 to decide on the deal.
If the proposal passes that vote, co-op shareholders will vote on whether to reduce its holding in the plc from 54pc to 41pc. The proceeds will be used to finance the co-op's part of the joint venture.
A circular containing details of the transaction will be sent to Glanbia plc shareholders in early November.
Yesterday, Glanbia co-op formally recommended its shareholders vote 'yes' on November 13.
Almost 7,800 members will be invited to attend at their regional polling stations to vote on the JV proposal.
A majority of 50pc plus one vote is required to approve it, while the A and B votes on the co-op's holding in the plc require a 75pc majority.
"The joint venture will facilitate the continued development of the existing global Dairy Ingredients Ireland business, including the flexibility to expand milk processing capacity post the abolition of milk quotas in 2015," said Glanbia co-op.
Chairman Liam Herlihy said he believed it was the "correct time to evolve the existing co-operative and plc model".
"A 'yes' vote will usher in a new era for milk production growth, for dairy processing ownership and for your society's relationship with Glanbia plc.
"The society will continue to be a very significant shareholder in the plc," the chairman added.
Despite the co-op's recommendation, a significant number of farmers are expected to oppose the deal. Four co-op board members are known to have voted against the proposal.
The co-op is holding a number of information meetings for its members, and it is believed vocal opposition has been expressed at those events.
Shares in Glanbia plc fell marginally in Dublin, sliding 0.1pc to €7.34. The stock is up more than 60pc in the last year, however.