Glanbia buys US nutritionals firm

By Paul Mooney

Glanbia has announced the acquisition of California based nutritional business, Seltzer Companies, for a total price of €81.8 million, of which €62.3 million cash is payable on completion.

The balance of €19.5 million will be paid on the achievement of specific performance targets.

Debt free

The business is being acquired debt free. The purchase will add about €60 million to Glanbia's 2006 debt.

Manufacturing

In 2005, Seltzer generated revenue equal to €41.0 million and pre tax profit equal to €5.0 million. It develops and manufacturers customised formulations for the growing functional food and nutritional supplements sectors.

These include amino acids, minerals and vitamins and nutritional premixes. Seltzer employs 94 people and services a customer base across the US from three facilities in San Diego County. The business will continue to be run by the existing management.

The acquisition enhances Glanbia's role as an existing supplier of nutritional premixes and customised formulations to food manufacturers.

Glanbia - less grain but 6,000 acres of OSR

As the harvest in the Glanbia intake area draws to a close, John Moloney, Glanbia CEO, estimates they will take in 160-170 thousand tonnes of grain compared with 200,000 tonnes in 2005.

Glanbia have already announced a price of €104/tonne plus VAT for barley and €112 plus VAT for wheat with a €2 top up for co-op members and subject to the firm's market review mechanism.

John Moloney said that he was unconcerned at the fall in grain intakes as more farmers engaged in inter farm trade, the more costs would be reduced.

The whole Glanbia group has now only two mills at Portlaoise and Clonroche.

This year, Glanbia have directly contracted with farmers for 6,000 tonnes of oilseed rape. It is understood that they are close to taking over Eilish Oil in Rathdrum in Co Wicklow to process this into biodiesel for use in their own trucks. The contract price to farmers is €240 a tonne at 9% moisture.

Support for quota changes

Glanbia agrees with the general thrust of the Minister's quota proposals, John Moloney said as he presented his six monthly figures on Wednesday. However, while he agreed with the general approach, he said he would be writing to the Minister Mary Coughlan with suggestions for improvement within a few weeks. He said he was concerned with the 30% deduction on all quota offered for sale - that this might deter sellers but he saw the "top slicing'' to control quota prices as important to protect farmers from themselves and the temptation to pay too much.

Discussions

At the moment, he said Glanbia is organising a whole series of intensive discussions with small groups of farmers, going through what they can afford to pay for quota and their future milk production plans. When this exercise is complete, the Minister will, he said, be informed of the groups's views and recommendations.

By Matt Dempsey editor