Glanbia Co-op proposes to acquire full ownership of Glanbia Ireland
Glanbia Co-op is proposing to take full ownership of Glanbia Ireland by purchasing Glanbia plc’s 40% stake and to deliver a €168 million spin-out of plc shares to Members.
Glanbia Co-op has signed a non-binding agreement with Glanbia 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.
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.
Spin-out of Glanbia plc shares to Members
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.
Glanbia Co-op proposes to create an Investment Fund, which will be available to pursue new opportunities for the Co-op. This Fund will be activated, when required, at a future date through the placement of up to 12 million Glanbia plc shares (value of €168 million at current share price).
Shareholding in Glanbia plc
Following the completion of the Glanbia Ireland transaction (4%) and spin-out of PLC shares to Members (4%), Glanbia Co-op’s shareholding in Glanbia plc will be reduced from 32.4% to approximately 24%.
In the event that the full Investment Fund is deployed, Glanbia Co-op’s shareholding in Glanbia plc would be reduced to approximately 20%.
At the forthcoming Special General Meeting (SGM), the Board will also seek to retain the existing 3% contingency around the threshold for general business purposes.
Chairman of Glanbia Co-op 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.”
Commenting today, 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.”
Glanbia Ireland is a world-class integrated agri-food and nutrition business, with a diverse portfolio of quality ingredient solutions, leading consumer and agri brands. In the 2020 financial year, GI generated €1.9 billion in revenue and a profit after tax of €60 million.
Glanbia Ireland has 11 processing facilities, 52 agri branches and over 2,100 employees. It is Ireland’s number one dairy company, with a 3 billion litre milk pool and paying over €1.3 billion directly to farm families for milk and grain this year. It is the largest buyer and user of Irish grains, with over 270,000 tonnes handled each year. Its award-winning brands are household names in Ireland, with Avonmore fresh milk being Ireland’s number one dairy brand. Glanbia Ireland has a strong global footprint with a market presence in the UK, France, Germany, UAE, the US, North Africa, Japan and China. Glanbia Ireland currently exports to over 80 countries.
Glanbia Group Managing Director Siobhán Talbot will today step down from the Board of Glanbia Co-op. The Board has appointed Jim Bergin to the role of Glanbia Co-op Chief Executive.
Glanbia Co-op Chairman John Murphy said: “Siobhán Talbot has provided outstanding leadership to Glanbia Co-op during a period of significant growth and development for the Co-op and its Members. We wish her continued success in her role as Group Managing Director of Glanbia plc.”
On completion of the proposed transaction, Glanbia plc will retain its current identity while Glanbia Co-op and Glanbia Ireland will transition to a new identity to be approved by shareholders.
The current existing commercial arrangements between Glanbia Ireland and Glanbia plc will remain in place until the name change is implemented.
Post the completion of the proposed transaction, certain corporate, business and IT services will continue to be provided by the PLC to Glanbia Ireland and Glanbia Co-op for a defined period.
Approvals and conditionality
All of these proposals have the unanimous support of the Board of Glanbia Co-operative Society, who recommend them to Members for approval.
These proposals are subject to the successful conclusion of contract negotiations and the relevant shareholder approvals within both Glanbia Co-op and Glanbia plc.
Voting on this ownership proposal and a series of proposed rule changes will be held at a Special General Meeting (SGM) of Glanbia Co-operative Society, the details of which will be announced in the coming weeks.
The Proposed Transaction will also be subject to approval by Glanbia plc’s shareholders via an extraordinary general meeting (EGM).
* Based on Glanbia plc closing share price of €13.98 on 9 November 2021.