In May 2010, on the eve of the Glanbia vote in Kildalton, I got a phone call from a friend.
He wanted to know if the co-op was going to agree to the proposal to buy the Irish business, to be known as "Dairy Ireland", from the plc. I truthfully told him I didn’t know, that the 75% bar that had to be hurdled was a very high one.
He then said he was wondering because he had plc shares, and he was wondering whether he should sell them or not. I was much clearer on that.“Don’t sell them,” I said. “Whichever way the vote goes tomorrow, Glanbia shares are a keeper right now.”
I was absolutely certain on that score. From a pretty low base of knowledge regarding all matters Glanbia, I had spent three months in the belly of the beast. It was obvious to me that the company was strong, and getting stronger.
While Glanbia was at a fork in the road, both roads led to good destinations, it seemed to me.
As an active shareholder of Glanbia co-op, growing grain for them, I was in a unique position for a journalist.
I had unfettered access to the round of meetings held with shareholders. I had heard of old rifts, witnessed new alliances, and heard almost all the senior management and about half the 14-strong co-op board explain the journey the milk processor was on.
I was embedded, and while I was travelling to Piltown unsure as to how I would vote myself, I believed in Glanbia’s future.
The vote narrowly lost. Fewer than 40 votes in the opposite direction would have resulted in a different decision in the giant marquee in Piltown at Kildalton Agricultural College. Some pointed to the turnout - it was a glorious May day, and every silage harvester from Duleek to Dungarvan would have been flat out.
Would a wet day have brought more farmers in favour of the proposal along? We can never know, and we can never know how things would have turned out if that proposal had gone ahead.
We do know how things turned out in this version of the metaverse.
The first thing that happened is that the board and management took the loss on the chin. Chair Liam Herlihy was asked what he would do next. He smiled and said he would get up the following morning and milk his cows.
It was a perfect answer - Glanbia were going to get on with it.
Any expectation that the market would hate the outcome was quickly dampened. Glanbia shares, shy of €3.00 on the day of the vote, went on a steady rise. Profits grew, driven by the nutritions business, particularly the US protein business.
Some said that was a bit of a fluke, that Glanbia bought a cheese business, and originally acquired a protein business to use up the whey which was a byproduct. I have no idea about that, but what is certain is that if CEO John Moloney and his management team got lucky, they drove that good fortune on hard and fast.
By the time Moloney stepped down in 2013, Glanbia shares were worth over €10, and Glanbia had planned a massive expenditure in a new dairy plant in Belview. Quotas were ending, and the future was bright for an Irish dairy company.
That project was happening within Glanbia Ingredients Ireland (GII), the joint venture formed between the co-op and the plc in 2012.
Dairy Ireland by degrees, some said, but there were differences.
Glanbia wasn’t just Ireland’s largest dairy company, processing about 1.7bn litres of milk annually. It was also the largest buyer of grain in Ireland, and the largest seller of fertiliser and animal feed.
The joint venture was just for dairy processing. The grain, feed and agribusiness still resided entirely within the plc, as did the liquid (fresh or retail) milk business.
GII had been created in a second process of engagement and debate within the co-op. The increase in the value of Glanbia shares transformed the cost to the co-op of buying into the business.
The 2010 deal would have cost 45% of the 55% of shareholding Glanbia Co-op held in the plc. It would have delivered the entire Irish business and the plc’s share of South West Cheese in the US (the original Glanbia joint venture).
In 2012, the co-op only had to spend a fraction of that to acquire 60% of the dairy processing business. The vote was overwhelmingly in favour - over 85% supported the proposal, and also agreed to share €224m worth of plc shares in a spin-out.
The share price was then at about €7.60. It would rise to almost €19 per share, meaning those spun-out shares were worth over half a billion euros at peak.
Since then, Glanbia has built Belview, and is now processing close to 3bn litres of milk a year. It has effectively built extra capacity to match the total output of Dairygold, Ireland’s second biggest dairy processor. It has acquired Wexford creamery, and trebled its output of cheese to about 50,000 tonnes annually.
In 2017, there was another conversation between co-op and plc. Another round of meetings, another big day out, this time at Punchestown racecourse.
This time, Glanbia Ireland was created, with the co-op now owning 60% of the entire Irish business.
Now, the co-op is poised to buy the plc's 40% of GIanbia Ireland - Dairy Ireland by the slow road. Current chair John Murphy may complete the journey Liam Herlihy started.
Murphy's been on his own journey. In 2010, the week before the vote in Piltown, we printed a range of views from shareholders. One of them was from John Murphy, recently elected to the board, but who had not yet taken his seat on the board. He was opposed to the deal on offer, becasue he said Glanbia's future was so bright this was not the time for the co-op to divest itself of so much shareholding in the company.
Now he comes full circle, to the same crossroads the co-op stood on almost a dozen years ago. Glanbia Ireland is a much bigger concern than Dairy Ireland was in 2010, and if farmers agree the deal, they will receive yet another spin-out of shares, to go with the one from 2012 and the further one from the Punchestown decision. The co-op will still retain about 20% of the plc, twice that it would have kept under the previous proposal.
It's generally expected that the deal will go ahead. Murphy and his board, Glanbia plc ceo Siobhan Talbot and Glanbia Ireland ceo Jim Bergin, (recently confirmed as the co-op's ceo too) owe Moloney and Herlihy a vote of gratitude here. Following the 2010 defeat, the 75% high hurdle was lowered to a much more simple majority courtesy of a co-op rule change.
That said, I'm hearing rumbles from shareholders that want to have this proposal fully thrashed out in public before any vote is taken. Stress-tested in meetings around the Glanbia region, which stretches from east Cork and parts of Tipperary right up through Leinster. The current Covid-19 surge makes that difficult at present, and Zoom meetings are perhaps an alternative.
In any event, it's vital that the process ensures that whatever decision is taken, Glanbia can move seamlessly on to the next stage of it's journey with no baggage. The board are set to have a fighting fund of 7% of shareholding at its discretion under the proposals. That's an estimated €300m for future investments. Perhaps thye are looking at renewable energy projects, anaerobic digestion has obvious synergies for dairy farmers.
Whatever happens, I'll have a ringside seat. I'll keep you all posted.