Farmers sign off on €20m sale of Wexford Creamery to Glanbia
Farmer-owners of Wexford Creamery have voted to sell the business to Glanbia.
Glanbia Ingredients Ireland (GII) secured another 100 million litres of milk supplies and 200 million litres of processing capacity after its €20m purchase of Wexford Creamery was given the green light this week.
Shareholders in the farmer co-op, Wexford Milk Producers (WMP), that owns 70pc of Wexford Creamery, voted to accept an offer from GII for the business.
The ballot, in the Talbot Hotel in Wexford on Tuesday night, was tighter than had been expected, with 57pc of the 326 shareholders voting for the deal and 43pc against.
Under the terms of the purchase plan agreed with GII, the farmers' co-op, WMP, will acquire the remaining 30pc shareholding in Wexford Creamery from British company Dairy Crest for €3m. GII will then pay €20m for the entire shareholding in the company.
The agreement follows on from several months of discussions between WMP and GII, as well as a series of information meetings held with farmer suppliers to Wexford Creamery.
Under the terms of the sale, WMP will receive a cash payment of €3.7m, which will be used to fund the purchase of the Dairy Crest stake, as well as allowing for the payment of a dividend to members.
The total dividend to be paid to farmers could actually top €2.2m, as the €1.5m for the purchase of Diary Crest's 30pc share of Wexford Creamery has already been raised by WMP.
The agreement will see WMP's 340 dairy farmers committing to supply their milk to GII for a period of 15 years, with suppliers being paid the same price on a monthly basis as GII dairy farmers.
Milk price was a key factor in WMP shareholders deciding to sell the business, as the price had lagged behind that paid GII and other processors.
The additional 103 million litres of Wexford Creamery milk will deliver economies of scale for GII.
However, the deal will also bring additional processing capacity, as the Wexford plant at Rocklands can process close to 200 million litres annually.
This additional capacity will be crucial for GII over the next five years, when the total volume of milk the company has to process is forecast to increase by over 50pc.
Opposition to the GII offer related to possible liabilities for WMP shareholders from the defined pension scheme of Wexford Creamery employees.
Unease was also expressed that WMP would not be represented on the GII board.