A win-win situation as farmers vote 'Yes'
Published 15/05/2015 | 02:30
It was one of those rare win-win situations. Glanbia Plc got the go-ahead to reduce the Co-op's shareholding from 41.4pc to 36.5pc and to whittle down the overcrowded boardroom, while farmers strolled out of the packed Gowran Park Racecourse with the chance to cash in on valuable shares.
It was never going to be controversial because this one, unlike the previous spin-outs, did not involve the creation of a new company or try to pawn off parts of the business.
This was a pure transaction, and there is not a farmer in the country who is going to say no at a time when many are contemplating the funding of a major farm expansion with the end of quotas.
Yet, if history repeats itself from previous spin-outs, then most will tuck the shares away as a nest egg or to hand on to the son or daughter who doesn't take over the farm.
"To me, no one sells Glanbia shares ... maybe a few people finished farming or expanding. You hang onto them as a comfort and you don't want to pay the taxman," said one dairy farmer at Gowran Park.
"An awful lot of people there were over the age of 50. It's good that they're giving younger farmers a chance to buy co-op shares." It also delivered a rare opportunity for retiring farmers to sell their co-op shares and for new farmers to opt in.
The overwhelming 'Yes' vote will see the Co-op's nominees on the Plc board drop from 14 to seven by 2020. Yet, it is hard to argue that a corporate conglomerate like Glanbia should have 22 members on the board.
The decision will give the farmers less of a voice in the Plc boardroom but they'll still hold on to their clout on the board of Glanbia Ingredients Ireland (GII) which sets the milk price for farmers.
Even as most farmers were happy to walk away with a windfall delivered by a high share price, a lot of the recent surge in the share price has been on the back of a strong dollar. Glanbia came out on top, but what the active dairy farmers will be watching is will they ever come out on top in terms of milk price.