Glanbia co-op votes on Friday

This Friday, 17 December, sees Glanbia Co-op vote on whether to buy Glanbia plc’s 40% share in Glanbia Ireland.

The special general meeting (SGM) of the co-op will actually vote on five separate proposals. The most significant, the €370m purchase of the plc’s shareholding of Glanbia Ireland, essentially the entire Irish business, only requires a simple majority of voters.

However, the other more significant votes need approval of two-thirds of all voting shareholders and also two-thirds of active milk producers.

The first of these votes will allow the co-op to reduce the minimum shareholding it must hold in the plc from the current 28% to 17%.

This would facilitate the use of shares to part-fund the purchase, to spin-out 12m plc shares to co-op members on a pro-rata basis, worth €148m at the Wednesday lunchtime share price of €12.32.

Other proposals would allow the co-op board add to the 14-strong board from within the co-op or outside it, and create a dividend fund

It also would free a similar amount of plc shares to be sold to part-fund the deal should the share price be deemed attractive. A further 4% of shares would be placed at the board’s discretion to fund future acquisitions.

Other proposals would allow the co-op board add to the 14-strong board from within the co-op or outside it, and create a dividend fund.

Huge registration

Over four and a half thousand of the seven thousand shareholders eligible to vote have registered for the SGM, which is being held online due to COVID-19 restrictions. Glanbia Co-op chair John Murphy thanked society members for registering in such large numbers, and urged them to cast their vote on Friday.

Endorsement

The ICMSA has publicly backed the package of proposals.

“Placing the business in a co-op structure makes sense and farmers will have control,” said president Pat McCormack. “Glanbia needs to be at the top of the (milk) league in a clear and transparent way.”

While the IFA has not formally endorsed the deal, its dairy chair Stephen Arthur strongly recommended the proposal on Monday night’s IFA/Glanbia webinar, which he chaired.

I’m looking forward to supplying a co-op in the near future

“I’ve been milking cows for 25 years, but never supplied a co-op,” he said. “A plc is not a model to buy or process milk,” he added, saying the buyout would “take the shadow, where the tail is wagging the dog, out of the picture”.

“I’m looking forward to supplying a co-op in the near future,” he concluded.

Other prominent IFA members, such as Kilkenny county chair Jim Mulhall and Kilkenny dairy rep Brendan Herlihy also supported the proposals, as did fresh milk producers chair Willie Lennon.

Opposition

Support is far from unanimous, with many who are opposed to the deal unhappy with the process as well as the proposals.

One Glanbia council member, Anthony Murphy from west Waterford, resigned his position last week.

Four members of regional committees have also tendered their resignations. Three of these, Vincent Gahan, Padraig Doyle and Nicholas Darcy, are from John Murphy’s own north Wexford/east Wicklow region.

Edmond Phelan, the recent ICSA president, resigned from the east Waterford committee on Wednesday.

[...] a group of dry shareholders have written to express their doubts about the legality of aspects of the process

John Cashman, the former board member who challenged the 2012 creation of the joint venture Glanbia Ingredients Ireland in the High Court, has written to the registrar of Friendly Societies to register his belief that the process breaches the co-op’s own rules.

In addition, a group of dry shareholders have written to express their doubts about the legality of aspects of the process, particularly the exclusion of “dry” A3 shareholders.

Change

The most significant adjustment during the five-week debate within the co-op has been the change in how the deal will be funded.

Initially, it was envisaged that about half the finance would be raised through the sale of shares, but a sharp fall in value from €14 to under €12 saw farmer resistance to selling shares at this time. Now, John Murphy says: “The co-op is able to fund this proposed transaction, if required, through a combination of existing cash resources and debt facilities.

“Therefore, the funding is not contingent on the sale of Glanbia plc shares owned by Glanbia Co-op.”