€307m to acquire 40% Glanbia shareholding

By Dan Walsh

Glanbia Co-op is proposing to take full ownership of Glanbia Ireland by purchasing Glanbia plc’s 40% stake in the strategic joint venture. Ireland’s leading dairy processor, Glanbia Ireland, is a €2 billion, integrated agri-food and nutrition business, with world-class dairy and grain processing assets and an award-winning portfolio of brands including Avonmore, Kilmeaden and GAIN Animal Nutrition.

Glanbia Co-op also proposes to create an Investment Fund that will be available to pursue new opportunities with the aim of driving higher returns for Co-op Members.

The new ownership model will support the Co-op’s ambitions to build one of Europe’s top Co-ops, with greater flexibility to support Members, pursue new opportunities and add value to milk and grain through innovation.

All proposals are subject to the successful conclusion of contract negotiations, the relevant shareholder approvals within both Glanbia plc and Glanbia Co-operative Society and any necessary regulatory approvals.

Glanbia Co-operative Society (“Glanbia Co-op”) has signed a non-binding agreement with Glanbia plc (“the PLC”) to take full ownership of Glanbia Ireland (GI). Currently, Glanbia Ireland operates as a strategic joint venture, 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.

New Glanbia Co-op Chief Executive Jim Bergin pictured with Glanbia Co-op Chairman John Murphy as the Co-op announced it is proposing to acquire full ownership of Glanbia Ireland. Glanbia Co-op also proposes a €168m ‘spin-out’ of plc shares to Members and the creation of an Investment Fund of €168m. (Photo: Mary Browne)

Subject to the successful conclusion of contract negotiations and the relevant shareholder approvals within both Glanbia plc and Glanbia Co-operative Society, Glanbia Co-op proposes to pay €307 million to acquire Glanbia plc’s 40% shareholding in Glanbia Ireland.

The PLC will contribute €8 million related to pension, rebranding and separation costs in connection with the proposed transaction. In addition, it is agreed that GI will not be required to pay the dividend payable to the

PLC in 2022 in respect of the 2021 financial year (estimated at €14 million) and up to the closing of the proposed transaction.

Up to 50% of the consideration payable for the proposed transaction will be funded by the Co-op through the sale of shares in Glanbia plc (estimated at approximately 11.5 million* shares), with the balance to be funded through borrowings.

Glanbia Co-op also proposes to transfer, via Share Spin Out, 12 million Glanbia plc shares to all existing Members of the Society. Based on the Glanbia plc’s closing share price of €13.98 on 9 November 2021, this would be worth approximately €168 million, or €11,028* for a Member with an average shareholding. 

This follows the spin-out of a total of 36.5 million Glanbia plc shares worth over €510 million* by Glanbia Co-op in 2013, 2015 and 2017. Glanbia Co-op is the largest individual shareholder in Glanbia plc, holding 93.3 million shares or 32.4% of the issued share capital of the company.

Chairman of Glanbia Co-op, Wexford-man John Murphy said: “These proposals are driven by our ambition to pay the best possible price for milk and grain to our farmer members. The proposal to take 100% ownership of the business closest to our farmers’ interests follows an independent strategic review undertaken by KPMG at the request of the Co-op Board. The Board believes that now is the right time to take this step to create a well-invested, independent and future-focused Co-op.

“This proposal is the latest step on our journey which began in 2012 with the creation of the strategic joint venture between Glanbia Co-op and Glanbia plc. If our members approve this proposal, we will have a very strong Co-op, with full ownership of Glanbia Ireland. We will remain the largest investor in Glanbia plc, which is focused on growing as a global nutrition company, benefiting all shareholders.

“We will have greater flexibility to support our farmers and be equipped with a dedicated Investment Fund to help drive higher returns in the future. Our fully independent Co-op will be run on pure Co-op principles with strong financial discipline, an experienced leadership team and Board. The Board have also decided that it is appropriate that all our Members would benefit at this time through the distribution of a proportion of the value created by our investment in Glanbia plc.”

Jim Bergin, Chief Executive of Glanbia Co-op said: “Glanbia Ireland today is a very strong standalone business, with circa €2 billion of annual revenue. We have excellent people and great brands. Significant capital investment of €559 million in recent years means our network of processing facilities are world-class, including our recently commissioned state-of-the-art Innovation Centre.

“We are very ambitious for this great business and are excited by the opportunities presented by this natural evolution to a pure Co-op. It will provide greater flexibility to support Co-op members, pursue new opportunities and allow us to focus on adding value to our milk and grain for the benefit of our farmers.”

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