Farm Ireland

Tuesday 22 May 2018

Farmers vote to get €15,000 windfall for Glanbia shares

Liam Herlihy, chairman of Glanbia Co-op Society
Liam Herlihy, chairman of Glanbia Co-op Society
Louise Hogan

Louise Hogan

More than 15,500 farmers are in line for a massive pay-out averaging more than €15,000 after voting in favour of a €170m conversion of valuable shares in Irish food giant Glanbia.

The move will distribute around €238m between members of the Glanbia Co-operative Society through the spin-out of 10 million Plc shares and a €68m members' support fund as the dairy sector faces into a time of great expansion with the abolition of milk quotas.

The 15,500 Co-op shareholders will receive an average of €15,300 each from the spin-out of the Glanbia Plc shares based on a buoyant March share price of €17.03.

However, it is understood the sum could vary from a couple of hundred euro to retired farmers to more than €150,000 for larger shareholders.

Almost 3,000 Society shareholders - many of who supply Glanbia with its 1.6 billion litres of milk each year - turned up to vote in Gowran Park, with 93pc voting in favour of reducing the Society's shareholding in Glanbia Plc to below 38pc.

It will see the Society's controlling interest in the Plc drop from 41.4pc to 36.5pc - which mirrors moves made by Kerry Co-op in recent years. It will retain discretion to reduce it further to 33pc in the future.

Farmers also voted in favour of a share buy-back plan to purchase up to three million existing shares from retiring farmers, to allow new farmers or current milk suppliers without any shareholding to buy in.

There are around 900 farmers in the south-east supplying milk to Glanbia who currently do not enjoy the benefits of being members of the co-op.

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In exchange, in addition to cutting the Co-op's interest in the Plc, the number of farmer members on the board of Glanbia Plc will be cut from 14 to seven by 2020.

It comes at a time when Glanbia - which accounts for 30pc of the national milk pool - has invested heavily in the sector with the opening of a €185m hi-tech milk processing plant, Belview, on the shores of Waterford Harbour.

Liam Herlihy, chair of Glanbia Co-operative Society, said the proposals were made at a time of unprecedented change in the Irish dairy sector.

"Many of our members are in a period of expansion and they clearly felt that this is an appropriate time to make some of the value that has been built up in the Society available to members, which will give them both security and resources for growth," Mr Herlihy said.

The move will see the sale of four million Glanbia Plc shares, which works out at 1.35pc of the issued share capital of the company, through brokers J&E Davy and Goodbody. The €63m fund will provide a safety net during times of low milk prices.

Walter Power, a dairy farmer from Nine Mile House, Co Tipperary, said the move made sense as it was "more important on the ground to have the cash to keep the wheels turning" than to have the Co-op ownership in the Plc.

The Glanbia share price closed at €16.81.

Irish Independent

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