Shareholders in Glanbia co-op are in line for a cash windfall if Glanbia co-op succeeds in creating Glanbia Ireland and transferring 2% of its plc shares to its co-op members. Based on a share price of €17.13, the 2% share spin-out would see about €100m returned to farmer shareholders.

For every 1,000 co-op shares held, the co-op will cancel 47 or 4.7%. In return for the 47 shares cancelled, the member will receive 154 plc shares (valued at €17.13). At this price, the value of these shares would be €2,600.

For active dairy farmer members, the average value of the spin-out would be almost €10,800.

The average farmer with a co-op shareholding could expect to receive over €6,600 from the spin-out.

Members will be asked to vote on the set of proposals before the end of May. A simple majority (at least 50%) is required to approve the transaction to create Glanbia Ireland and the €40m member support fund. For the share spin-out to carry, it must be approved by two-thirds of shareholders. Of course, many farmers may choose not to sell their plc shares. Tax is not due on shares received as capital gains tax is paid on shares sold.

Around 700 farmers bought shares in Glanbia co-op from 2015 to 2016. Dairy or grain suppliers who wished to be a member of the co-op were required to hold a minimum 2,000 shares. With shares costing €5 each, a typical farmer invested €10,000 in order to take advantage of co-op supports on milk, grain, feed and fertiliser, which amounted to €37m in 2016.

Co-op shareholders also receive an annual dividend (10c/share in 2016).

Last year, there was also a special one-off dividend of 42c/share.

If this current proposal is successful, a shareholder who last year invested €10,000 will see over €6,000 returned during 2016 and 2017.

Saudi cheese deal

In further good news, Glanbia has just completed a long-term agreement with Almarai in relation to the supply of cheese for consumption primarily in the Saudi Arabian market. Glanbia Ingredients Ireland’s (GII) Kieran Duggan highlighted the importance of the Middle East market for providing opportunities for cheese exports for GII outside of the UK in addition to the potential that this supply agreement has to support GII’s ongoing efforts related to managing price volatility.

Read more

What’s behind the Glanbia deal?

Comment: is this a good deal for farmers?

Editorial: Glanbia proposal – questions to be asked