Farm Ireland

Monday 19 March 2018

Glanbia gets green light from shareholders for restructure plans

Siobhan Talbot, Glanbia Group Managing Director pictured speaking at the Glanbia Co-Op Special General Meeting at Punchestown Event Centre in Co. Kildare.Picture Dylan Vaughan.
Siobhan Talbot, Glanbia Group Managing Director pictured speaking at the Glanbia Co-Op Special General Meeting at Punchestown Event Centre in Co. Kildare.Picture Dylan Vaughan.

Louise Hogan and Ciaran Moran

FARMERS have voted in favour of a €100m spin-out of valuable Glanbia plc shares as they agree to buy a slice of the dairy giant’s consumer and agri-business.

Thousands of dairy and grain farmers from the Kilkenny-based Glanbia Co-op arrived by cars and buses to cast their vote at the special agm at Punchestown event centre.

Farmers voted in favour of paying €112m to acquire a 60pc shareholding in the Plc’s Dairy Ireland division, which consists of Glanbia Consumer Products and Glanbia Agribusiness.

On the day farmers voted to approve the Glanbia Ireland joint venture by 93pc while they voted in favour of the share spin-out and disposal by 91pc.

Chairman Henry Corbally said they always "felt it was the right direction" and it had "advantages for the Plc and farmer shareholders".

Mr Corbally said farming was a "more difficult place" to make a living and they felt the organisation would do its utmost to support them.

The proposal is to create a joint venture in Glanbia Ireland, which will combine Glanbia Ingredients Ireland (GII) and Dairy Ireland’s agri-business and consumer foods division.

Glanbia Ireland will combine Glanbia Ingredients Ireland, Glanbia Consumer Products and Glanbia Agribusiness, as a joint venture 60pc owned by the Co-op and 40pc owned by the plc.  This builds on the Glanbia Ingredients Ireland (GII) joint venture established in 2012.

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They also secured more than the two-thirds support needed to pass the proposal to spin-out 5.9 million shares in Glanbia plc to all members of the Co-op and to create a €40m Member Support Fund. The support fund is designed to supplement prices to dairy and grain farmers in times of low prices.

Based on the Glanbia plc closing share price of €17.13 from February, the value of the spin-out is estimated at €100m.

For active dairy farmer members, the average value of the spin-out would be €10,791. This would be worth approximately €6,637 for a member with the average shareholding.

It gives farmers the option to cash-in on the valuable plc shares if they need an injection of monies for the business.

This meant that farmers cashed in on 3pc of the co-op’s shareholding in the plc. A further 2pc was spun out to farmer members. This dilutes the farmer co-op’s shareholding in the plc from 36.5pc to 31.5pc.

The new 60pc stake in the agri-businesses and consumer foods division means a dividend will be paid back to the co-op which can be used to shore up prices where necessary.

IFA president Joe Healy said the proposals also recognise the need for a “more sustainable mechanism to support farmers through volatile product prices, while funding important investment to process additional milk output”.

He said the key issue for farmers into the future is that Glanbia consistently pays leading base prices for milk and grain, and that inputs are competitively priced.

The ICMSA’s president John Comer said farmers operative in a competitive world and there must be no link between purchasing inputs from the agri-business and the prices paid to farmers for milk and grain.

It is seven years since the farmers voted against purchasing 100pc of the businesses a deal that would have cost them a significant chunk of their shareholding. This time around the Glanbia plc shares had soared in value which meant they had to part with a smaller part of their valuable stake.

Online Editors