Farm Ireland

Saturday 20 January 2018

Herlihy backs dairy revamp

Declan O'Brien

Declan O'Brien

Liam Herlihy has delivered a clear signal that Glanbia Co-op would be active participants in the restructuring of the dairy industry should the plan to acquire Glanbia's Irish businesses get the green light.

The co-op chairman said that while the first priority of the co-op would be to get "their own house in order" should their buyout plan succeed, he added that growth through amalgamation would be considered.

"No industry can stand still and there is room for further consolidation and integration at the processing and marketing ends of the Irish dairy sector," Mr Herlihy said.

"I believe the co-op model lends itself to participation in that arena, should a suitable opportunity arise," he added.

There have been suggestions that a successful buyout of Glanbia's Irish businesses by the co-op would give fresh impetus to moves to drive restructuring in the industry.

There has been some talk of a tie-up between Glanbia and Dairygold as the two businesses already have an ongoing operating relationship.

While Dairygold officials have been slow to comment on the issue, the general view in the industry is that such a move would be far simpler if it was a case of co-op dealing with co-op.

There have already been moves towards dairy restructuring this year, with Kerry making a pitch for Newmarket and Arrabawn and Kerry entering talks on the latter's liquid milk business in Galway.

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The proposed buyout of Glanbia's Irish businesses by the co-op has been cautiously welcomed by farm bodies.

"I am in principle totally in favour of a move which, subject to satisfactory agreement on terms, will allow farmers to regain control of the entire Irish business, even though this would require a reduction of the co-op's stake in the plc, which would then control only the non-Irish assets," said Kevin Kiersey, the IFA national dairy committee chairman..

"However, the success of the project will depend on the full details of the deal and their implications for suppliers and shareholders, and proper recognition of the value built up in the plc businesses based on their investment and that of their forefathers. This will take some time to emerge," he added.

The ICMSA has indicated that it will hold off commenting on the move until the full details of the package emerge.

However, the association's leadership met with members of the Glanbia Co-op board last week. "If they explain it [the buyout plan] to farmers the way they laid it out to us, I think farmers will buy into it," one ICMSA source said.

The co-op plans to sell a significant proportion of its 54pc stake in the plc to fund the purchase drive. The co-op's 158m shares are worth €400m.

Irish Independent