Glanbia Urges ‘Yes’ To Joint Venture Move
GLANBIA Co-operative Society Limited (Society) has written to its members recommending that the Society enter into a 60 per cent (Society): 40 per cent (plc) joint venture with Glanbia plc in respect of Dairy Ingredients Ireland, the Irish dairy processing business of Glanbia plc (Glanbia or the plc).
The Society’s stake will be part funded by the sale of 3 per cent of the issued share capital of Glanbia plc, of which the Society is currently the 54.4 per cnt majority shareholder.
The society is also proposing a further 10 per cent share spin-out and sale of its shareholding in the plc, 7 per cent would be transferred directly to society members as a share spin-out (€122m value based on closing share price of €5.91 on Friday, August 24, 2012; 3 per cent (valued on the same basis at €52m) would be sold by the society to inject additional equity into the joint venture, with the remainder being retained by the society, thereby strengthening its balance sheet.
Both the joint venture and the share spin-out and sale are being put to a member vote. The share spin-out and sale is contingent on a successful joint venture vote. If the joint venture is not approved neither proposal will proceed. If the share spin-out and sale is approved, the society would remain by far the largest shareholder in the plc, with a 41.4 per cent interest valued at €718m (based on closing plc share price on August 24, 2012).
Society chairman Liam Herlihy said: “Now is the right time to evolve the existing Co-operative and plc model which was introduced in the quota era that began almost 30 years ago. This joint venture will enable the society, on behalf of all members, to gain a direct, 60 per cent ownership of assets that are critical to milk production and expansion. It will create a sustainable platform, post milk quotas, for a projected 60 per cent growth in milk output by 2020. Both the joint venture and share spin-out proposals deliver tangible benefits for all members.”
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