Glanbia farmer members have a number of proposals to consider as the co-op seeks to reduce its shareholding in the plc from 36.5% to 31.5%, with the flexibility to go to 28% in time.
These five proposals will be put to a vote of members in May with a majority above 50% required to pass the Dairy Ireland transaction and member support fund, and 66% required for the share spin-out and the rule changes.
1 Buy 60% of Dairy Ireland
Firstly, Glanbia co-op proposes to sell down a further 3% of its shareholding in Glanbia plc to take a 60% controlling stake in the plc’s Dairy Ireland division, which comprises consumer foods and agribusiness.
As part of the agreement, Glanbia co-op proposes to pay €112m for the 60% share, funded through the 3% share sale. The plc will remain owners of the other 40%.
Glanbia Ireland will have sales of €1.5bn and will subsume GII
If the proposal goes through, Glanbia Ireland will have sales of €1.5bn and will subsume the milk processing joint venture called GII (Glanbia Ingredients Ireland), which was formed in 2012 between the co-op and the plc.
Should the proposed transaction be completed, Jim Bergin, currently CEO of Glanbia Ingredients Ireland, will become CEO of Glanbia Ireland.
The consumer foods business owns brands such as Avonmore, Kilmeaden Cheese, Premier Milk and Wexford. The agribusiness includes the 1m-tonne grain and feed business, along with the agri-stores network and Gain Feed brand.
2 Create a €40m member support fund
The board of Glanbia co-op also proposes to create a €40m member support fund.
This will be 50% funded through the sale of Glanbia plc shares, with the balance from co-op resources.
3 Spin-out €100m of plc shares to members
A further proposal is for the co-op to spin out 2% of its shareholding in the plc and return these shares to farmer members. This would further reduce the co-op ownership in the plc to 31.5%.
This spin-out amounts to €100m, based on last Friday’s share price of €17.13, and will transfer in the form of plc shares to the co-op member.
The spin-out amounts to €100m, based on last Friday’s share price of €17.13
For every 1,000 co-op shares held, the co-op will cancel 47. In return for every share cancelled, it will issue 3.27 shares in the plc. So, for the 47 shares cancelled, the member will receive 154 shares in the plc valued at €2,600, or €17 per share.
4 Reduction in board representation
Glanbia co-op’s representation on the Glanbia plc board will drop by one director in 2022, taking the co-op’s total representation on the Glanbia plc board to six directors out of 14 in 2022.
5 Option to reduce stake in plc to 28%
The co-op is also seeking the discretion to further reduce the co-op’s shareholding in Glanbia plc to 28%.