Glanbia plc and Glanbia Co-op have announced the signing of a non-binding memorandum of understanding for the sale of the plc’s 40% interest in Glanbia Ireland to Glanbia Co-op for a purchase price of €307m.
If approved, this will allow the plc to focus on Glanbia's performance nutrition and nutritionals business, while it will allow the co-op to be in sole control of its dairy business.
The deal is subject to a number of legal agreements including €307m in cash and a €28.8m shareholder loan to be repaid within one year to the plc.
The plc will also fund €8m in transactional costs.
Glanbia Ireland and the co-op will both have to change their names to ones not including term Glanbia.
Effective immediately, managing director Siobhan Talbot will step down from her role on the board of the co-op. On or before completion, the plc representatives on the Glanbia Ireland or co-op board will retire.
Subject to appropriate board approvals, it is expected that the proposed deal will be executed in early 2022.
The plc will hold an extraordinary general meeting (EGM) for its shareholders, while the co-op will have to hold a special general meeting (SGM) and a vote to approve the deal.
Glanbia co-op proposes to fund 50% the deal cost by selling shares it owns in the capital of the plc, with the balance to be funded through borrowings.
Furthermore the co-op intends to transfer via a spin out to its members up to 12 million shares it owns in the plc. These proposals will be subject to a co-op member vote at its SGM.
Heritage nd development
Commenting today, Donard Gaynor, chair of Glanbia plc said: “Glanbia Ireland has a successful heritage, and for many years we have valued the partnership with Glanbia Co-op in creating a strong business under our joint stewardship. This is the right time for the proposed transaction. The co-op is the right owner to continue the strategic development of Glanbia Ireland for the benefit of the co-op’s members, and the plc can continue to maximise the opportunities for its own business in the post-COVID-19 environment, with our focus on health, wellbeing and nutrition.”
Siobhan Talbot, group managing director of Glanbia plc added: “Today’s announcement represents the next stage of our transformation journey following many years of successful collaboration with Glanbia co-op as joint venture partners in Glanbia Ireland.
"If approved, the proposed transaction will continue the alignment of our portfolio to our strategy, which is focused on driving growth through our market leading positions as a brand owner and ingredient solutions provider, playing into strong underlying consumer health and wellness trends. We expect to deploy the capital received from the proposed transaction in investment to drive further growth and to return capital to shareholders.”
Background to the deal
In early October John Murphy, the Glanbia Co-op Chair told the Irish Farmers Journal the company was working on options for the co-op ownership structure.
He announced at the co-op's AGM in July that he was open to looking at options and said he had appointed specialist advisors to look at options.
Speaking to the Irish Farmers Journal in early October, Murphy said: "We appointed advisors in July to have a thorough review of the business.”
The rumours back then were that Glanbia co-op would reduce their shareholding in Glanbia plc to fund an increasing ownership stake in Glanbia Ireland.
In the last year Glanbia plc's share price has increased significantly bringing the value of the co-op stake in the plc towards the €1.4bn mark. The plc share price dipped to a low of €9 in October 2020, and has hovered at just over €15 since September 2021.
Glanbia Ireland is a joint venture owned 60% by Glanbia Co-op and 40% by the plc. It is the largest milk processor and grain buyer in Ireland, producing a range of value-added dairy ingredients and consumer products as well as selling farm inputs.
Glanbia Ireland operates 11 processing plants, 52 retail branches and has over 2,000 employees.
In the 2020 financial year on a 100% basis, it generated €1.9bn in revenue and a profit after tax of €60m.
Glanbia Ireland contributed €23.9m to the share of results of Glanbia equity accounted investees in the 2020 financial year, equating to approximately 8.5c of plc adjusted earnings per share.