Farm Ireland

Tuesday 16 January 2018

Glanbia shares windfall valued at €190m

Henry Corbally, chair of the Glanbia Co-op
Henry Corbally, chair of the Glanbia Co-op
Louise Hogan

Louise Hogan

Farmers are expected to receive the 10 million Glanbia plc spin-out shares, now valued at over €190m, in September.

Over 15,000 farmers in line for the windfall have seen the share price in the Kilkenny-based dairy giant climb from just over €14 in February to almost €19.50.

However, Ian Huggard, an analyst with Investec, said a flood of shares entering the market was unlikely as shareholders tend to hold onto these shares for 'rainy day' funds.

The spin-out of shares to the dairy co-op members mirrors the moves made by Kerry Co-op in recent years.

The analyst pointed out the market expected many to keep them as retirement nest eggs and others in case cash flow difficulties increased in the future on the back of falling milk prices.

"I don't think we'll see a massive run for the exit as we didn't see it with Kerry," he said. Mr Huggard pointed out the agri-business sector and Glanbia as a whole does look a "bit expensive" at the moment, but they have experienced massive international growth.

The applications for new co-op members cannot be processed until after the 10 million plc spin-out.

However, Henry Corbally, the chair of the Glanbia Co-op, has written to around 800 milk suppliers inviting them to purchase a minimum €10,000 shareholding in the co-op to access co-op support payment top-ups. These include new entrants, around 150 members of the Wexford Milk Producers and members of smaller co-ops taken over by Glanbia such as Bunnoe.

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The cost of the co-op shares has been set at €5 a share and suppliers must buy a minimum of 2,000 shares or one share per 200 litres of milk. They'll receive back payments of co-op supports since March. Glanbia cut it's June milk price to 26c/l, with 1c/l co-op support and 1c/l from stability funds.

Indo Farming