Farm Ireland

Thursday 18 January 2018

Glanbia sale has issues to iron out

Declan O'Brien

Declan O'Brien

There is no certainty that the proposed purchase of Glanbia's Irish milk processing, consumer foods and agri-trading operations will be given the green light by its farmer shareholders.

Any deal will require the backing of 75pc of the 7,300 shareholders in two votes.

The challenge in delivering this is not being underestimated by the co-op board. However, they are precluded from holding farmer shareholder meetings until after an offer is actually made.

This initiative is very much one that is being driven by the co-op board. It is viewed as an opportunity to bring the fortunes of the business back under farmer control.

However, while this is broadly supported by milk suppliers, it may be more difficult to convince the co-op's 3,000 agri-trading shareholders that breaking clear from a successful operation, such as Glanbia plc, is a good idea.

In this sense, the farmer meetings will be vital. The word from farmer representatives who have met with the board has been very positive.

They maintain that the board has a sound plan and a very focused view of how they see the business developing should the buyout proposal go ahead.

The key issue from the farmers' perspective is what's in it for them.

Also Read

For milk producers the attraction is the possibility of a stable milk price, given that volatility in the dairy sector is likely as quotas are to be dropped after 2015.

Cereal growers might also feel they will get a fairer deal from an operation that is farmer-owned.

However, the deal's detractors argue that paying above the odds for milk or cereals will be a case of the business 'eating tomorrow's dinner today' and will gradually undermine its financial stability.

Buy-back opponents point to the performance of neighbouring co-ops to support their stance.

Replacing a leader of John Maloney's proven track record is another cause for concern. These fears will need to be assuaged.

Irish Independent