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Glanbia plc is proposing to sell 60% of its Dairy Ireland division to the co-op. As part of the agreement, Glanbia Co-op proposes to pay €112m for this 60% share of the plcs’s consumer products and agribusiness divisions.
Glanbia co-op proposes to finance the transaction via the sale of up to 3% of its holding in Glanbia Plc, subject to vote. This will reduce the co-op’s shareholding from 36.5% to 33.5%. A further proposal is for the co-op to spin out 2% of its shareholding in the plc to members, which would have the effect of reducing the co-op ownership in the plc to 31.5%. This will be put to a vote of co-op shareholders before the end of June.
Glanbia Ireland
The first proposal will see the co-op form a new joint venture called Glanbia Ireland, which will be 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.
The consumer foods business owns brands such as Avonmore, Kilmeaden Cheese, Premier Milk and Wexford. The agribusiness owns the Gain Feeds brand.
Glanbia Ireland will have sales of €1.5bn and will include the joint venture formed in 2012 between the co-op and the plc, GII (Glanbia Ingredients Ireland). Should the proposed transaction complete, Jim Bergin, who is currently the chief executive of Glanbia Ingredients Ireland, will become the chief executive of Glanbia Ireland.
Voting on this joint venture proposal will be held at a special general meeting (SGM) of Glanbia Co-operative Society.
Spin out
The co-op is also proposing to spin out €100m (based on the current share price of €17.13) of Glanbia plc shares to members and create a €40m member support fund. This would see 5.9 million plc shares or 2% of the issued shares of Glanbia plc move from the co-op to the members.
The board of Glanbia Co-op also proposes to allocate €40m of its resources to a member support fund. This will be 50% funded through the sale of Glanbia plc shares, with the balance from co-op resources.
Board changes
The co-op also wants the discretion to further reduce its shareholding in Glanbia plc to 28%, as well as requiring further member approval for any future proposal to reduce the co-op’s shareholding in Glanbia plc below 28%.
If all of the proposals are approved, there will be a further reduction of Glanbia Co-op’s representation on the Glanbia plc board by one director in 2022, taking the co-op’s total representation on the Glanbia plc board to six directors in 2022.
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