Glanbia revamp on track after co-op vote
Glanbia has edged closer to a radical re-organisation of the group after nearly three-quarters of its 7,800 co-op members voted to create a joint venture that aims to capitalise on the elimination of milk quotas in 2015.
A ballot on Tuesday evening resulted in a record 77pc turnout from those eligible to vote on the deal, with 71pc of those voting in favour.
Glanbia co-op members own a 54.4pc stake in stock-market-listed Glanbia plc. Yesterday's vote will reduce the holding to 51.4pc.
The joint venture will be 60pc owned by co-op members and 40pc by the plc.
The company plans to invest €180m to develop a milk processing facility on the Waterford-Kilkenny border.
That will leave Glanbia plc free to focus on its nutritions business, which includes a significant cheese production facility in the US.
The joint venture, Glanbia Ingredients Ireland, will become operational on November 25, subject to approval by Glanbia plc shareholders at an extraordinary general meeting next Tuesday.
"After a number of months of constructive and informative debate, we greatly welcome the strong endorsement by society members of the joint venture proposal," said Glanbia plc group managing director John Moloney.
He said the step represents a "significant and penultimate step" towards the completion of the joint venture, which he said is a "substantial strategic opportunity" for Glanbia and the society.
Irish Farmers' Association president John Bryan also welcomed the outcome of the vote. He said the creation of Glanbia Ingredients Ireland "clears the way for further consolidation in the sector".
This week's vote by co-op members sanctions the sale of 3pc of their 54.4pc holding in Glanbia plc, bringing their stake to about 51.4pc.
They will have to vote again as to whether they will sanction the sale of another 10pc of their Glanbia plc stake.
The proceeds of that would be split between the co-op farmers and used to fund the joint venture.
To secure that move, a 75pc approval will have to be obtained from voting members.
Two votes will be held to sanction that stake sale – one on November 28 and another on December 12.
Analyst John Mullane at Dolmen Stockbrokers said the sale of the stake by the co-op members would be beneficial to investors.
"The increase in the free float would have the dual benefit of making the stock more attractive to institutional investors while also increasing the corporate flexibility of management," he said.