Glanbia Co-op has announced that it has completed the sale of approximately 5.75m ordinary shares in Glanbia plc at a price of €12.25 per share. This is equivalent to about 2% of Glanbia plc’s issued share capital.
In total, this will raise about €70m for Glanbia Co-op that will go towards the outright purchase of Glanbia Ireland. This means Glanbia Co-op has now reduced its holding in Glanbia plc from approx 32.4% prior to the Christmas vote down to 30.5%.
In a separate deal, the co-op also announced that it has raised €250m through an equity-linked exchangeable bond.
This means instead of selling the shares and taking the cash, the co-op is borrowing on the back of the shareholding. Essentially, the co-op is using the security of the shares to get the loan.
The deal ties up approx 15.1m Glanbia plc shares (5.3% of the co-op shareholding). The co-op retains the ownership of the shares until such time (if any) that an exchange is exercised in accordance with the terms and conditions of the deal.
The co-op will continue to get the plc dividend on the shares.
The terms and conditions of the bond deal were not released, but it is thought that the interest rate on the bond is less than 1.9% and that the share price increase threshold to trigger a gain for the bond holders is in the order of 35%.
This means if the share price value increases above 35%, the bond holders get that value (the upside to the deal). If share price stays below a 35% share price increase, the value stays within the co-op.
Just prior to Christmas, Glanbia Co-op shareholders voted to become the outright and sole owner of Glanbia Ireland. At a special general meeting (SGM), over 80% of over 4,500 attending co-op shareholders voted in favour of five linked resolutions. This effectively gave the co-op permission to reduce its shareholding in the plc from the current 32.4% to 17% if it so wishes.
Glanbia plc has to have an extraordinary general meeting (EGM) and that date has not been set yet. Glanbia plc shareholders need to give approval for the deal to progress to the next step. If it gets approval, Glanbia Co-op proposes to pay €307m to acquire the plc’s 40% shareholding in the JV Glanbia Ireland and the detail above is how they plan to fund it.
Glanbia Co-op chair John Murphy said: “I am pleased to confirm to co-op members that we have successfully completed the financing arrangements required to put in place the funding for our proposed acquisition.
"Our members voted overwhelmingly in favour of taking 100% ownership of the world-class processing assets closest to our farmers’ interests and we look forward to closing that transaction in the coming months, subject to the approval of Glanbia plc’s independent shareholders at their EGM.”