The proposal for the co-op to buy 60% of the consumer foods and agribusiness from Glanbia plc has moved a step closer this Wednesday as both partners signed binding legal agreements to create the Glanbia Ireland joint venture.
This comes as Glanbia announced in a trading update in the morning that group revenues increased 8% and as the plc holds its AGM this Wednesday in Kilkenny.
Glanbia Co-op shareholders will be asked to vote on the proposal on 18 May at a special general meeting (SGM) in Punchestown. The proposed transaction will also be subject to approval by Glanbia plc’s shareholders via an extraordinary general meeting (EGM) on 22 May.
Glanbia Ireland will be a joint venture 60% owned by Glanbia Co-op and 40% owned by Glanbia plc. The co-op is also proposing to spin out €100m Glanbia plc shares to co-op members and also create a €40m member support fund to support dairy and grain prices in times of low market returns.
Glanbia co-op is proposing to pay €112m to acquire a 60% shareholding in the plc’s Dairy Ireland division, which consists of consumer products and agribusiness, and combine this with Glanbia Ingredients Ireland to create Glanbia Ireland.
The spin-out would be worth approximately €6,637 for a member with the average shareholding. For active dairy farmer members, the average value of the spin-out would be €10,791.
Henry Corbally, chair of Glanbia co-op, said: “The proposed creation of Glanbia Ireland is an exciting development for Glanbia farmers. It brings the strong portfolio of Glanbia’s Irish dairy and agribusiness assets into majority co-op ownership, while building on the strong partnership with Glanbia plc. I would encourage all members to familiarise themselves with these proposals and to attend our SGM”.
Siobhán Talbot, group managing director of Glanbia, said: “Having established GII and successfully managed the transition to a post-quota milk environment, there is a compelling rationale to combine the Irish businesses and supply chain to create efficiencies and scale. GII suppliers plan to supply 30% more milk in 2020 than in 2016. The financial strength of the Glanbia Ireland business will allow it to fund a €250m to €300m investment programme to 2020 without a requirement for supplier contributions.”
If all of the proposals are approved, the Co-op would see its ownership in the plc fall from 36.5% to 31.5%.