Over 80pc of Glanbia's farmer shareholders give up controlling interest in food group
GLANBIA'S farmer shareholders have overwhelmingly backed plans to give up their controlling interest in the food group they part own, as they prepare for a huge increase in milk production after EU restrictions are removed in three years' time.
More than 82pc of Glanbia Co-op members backed plans to reduce the co-op's stake in Glanbia PLC from 51pc to 41pc, easily passing the 75pc threshold that was required.
A fortnight ago Glanbia Co-op members backed a move by the PLC to spin out its milk processing business into a joint venture 60pc owned by the co-op.
To finance that plan, the co-op said it wanted to sell down its holding in the PLC. The co-op reduced its stake from 54pc to 51pc last week, but needed shareholder approval to reduce it below that level.
At 4,649, turnout was particularly high which was seen as boosting the 'Yes' side.
Members will vote again on the proposal on December 12, but given the strong support shown yesterday, it is expected to easily pass the second ballot.
The move is an historic one for the farmers, as they give up a majority stake in the PLC that they had closely guarded for years.
The result also means farmers will be able to take part in a €224m share spin-out and sale. While much of that will go straight into the joint venture, about two-thirds will be distributed to shareholders as PLC stock.
Under the terms of the deal, co-op shareholders will see their co-op shares replaced by about 3.3 PLC shares, paving the way for an average windfall of about €15,000 per shareholder.
Co-op chairman Liam Herlihy welcomed the result of the ballot. "This is a solid endorsement of the board's proposal," he said. "Securing the support of 81.8pc of members attending and voting on the day is a tremendous achievement, but to be effective it requires another 75pc approval at a confirmatory vote.
"A ' Yes' vote (then) will give our newly established JV a strong start; it will put cash into the society which will give it the flexibility to provide a wide range of options for members, and it will distribute €157m of PLC shares to members.
"In addition, based on the current share price, the society's shareholding in the PLC will be worth close to €1bn," Mr Herlihy added.
Glanbia PLC managing director John Moloney said he welcomed the "vote by society members and we look forward to the successful outcome of the confirmatory vote".
December's ballot will bring to a close a process that was announced in August but can be traced back to a failed attempt by the PLC to demerge its milk processing business from its high margin, highly profitable nutritionals business in May 2010.
Glanbia now makes most of its money from the nutritionals sector, which provides supplements and proteins to sports teams and athletes such as rugby player Rob Kearney.
By the close in Dublin, shares in Glanbia had slipped 0.75pc to €7.96.
The shares are up nearly 80pc in the last year.
Meanwhile, Dairygold has launched a €15m loan note issue in an effort to persuade members to contribute to expansion of its milk processing facilities post 2015.