Glanbia does €160 mill deal that includes sale of Portlaoise mozzarella plant

Glanbia is selling its interest in a Portlaoise cheese plant which was the result of a €130 million investment with an American company that is now taking over its full operation as part of a €160 deal with the Irish food giant.

Glanbia and US firm Leprino Foods Company have announced that they have signed a non-binding agreement for Leprino Foods to acquire full ownership of Glanbia Cheese, a leading mozzarella maker in Europe. It comprises Glanbia Cheese UK and Glanbia Cheese EU. 

The two firms have already partnered on the building of the Portlaoise plant which went into operation in April 2021 making pizza mozzarella cheese for the European market. Glanbia says 100 people work at the plant has a production capacity of 45,000 tonnes of mozzarella cheese per annum.

The 40,000-metric ton facility requires significant amounts of dairy ingredients - the equivalent of 400 million litres of milk a year to operate.

The development, which was announced in July 2018, was the first big client to set up in the Laois County Council driven National Enterprise Park in Portlaoise.  It is located near the M7 Togher interchange on a new access road built by the Council that also links to the town's Clonminham Industrial Estate.

A statement said it is expected that Glanbia plc will receive initial cash consideration in excess of €160 million (inclusive of repayment of shareholder loans) for the sale of its stake in Glanbia Cheese. It says there is the possibility of additional contingent consideration of up to €25 million over the next three years, dependent on business performance. 

Glanbia Cheese has three manufacturing facilities – Llangefni in Wales, Magheralin in Northern Ireland and Portlaoise. The company says the existing team will continue to manage the business, led by CEO Paul Vernon and his senior management team, with no disruption to day-to-day operations. 

In reply to the Leinste Express, Glanbia said there will be no redundancies adding that it "will be very much business as usual" for the Portlaoise operation and other plants in Glanbia Cheese that are part of the deal. It confirmed that 500 people work in Portlaoise and plants in Northern Ireland, Wales and England.

Based in Denver, Colorado, and founded as a small, family-run cheese business 65 years ago, Leprino Foods now claims to be world’s largest mozzarella cheese maker and top producer of whey protein and dairy ingredients.

Still family-owned, the company says it prides itself on having a reputation of being a dairy industry pioneer, supplying the highest-quality products to food and nutrition companies around the globe.

Mike Durkin is President and CEO of Leprino Foods which has its HQ in Dever, Colorado. He commented on the deal.

“Having successfully partnered with Glanbia since 2000, we are proud of the high-quality business that we have helped build. We look forward to working with Paul Vernon and the local team to ensure a seamless transition for our employees, customers and suppliers.

"We intend to take advantage of our combined expertise, knowledge and strengths to further enhance the business and are committed to ongoing investments in the core capabilities and the talented people that set us apart from our competition. We thank Glanbia for their valued partnership and wish them continued success,” he said.

Siobhán Talbot is Group MD Glanbia plc also commented in a joint statement.

"Glanbia and Leprino Foods have enjoyed many years of successful partnership since our first Joint Venture was established. As we have evolved our portfolio at Glanbia in recent years, we have become very focused on our nutrition strategy, serving consumer health and wellness categories through our brands and ingredient solutions business. 

"From the plc’s perspective the logic of this transaction is clear as it allows us to focus on our core better nutrition strategy and to allocate further capital to our global growth businesses. We have had a long and successful partnership with Leprino Foods, and we wish Paul and the entire team every success for the next chapter of the business,’ 

Paul Vernon, CEO Glanbia Cheese concluded.

"Glanbia Cheese is a strong, well invested business with an excellent team and deep customer and supplier relationships. We are excited by this proposed transaction which will see us align our business into Leprino Foods, the largest and most successful mozzarella business in the world. 

"Glanbia Cheese will be a strong fit within Leprino Foods, with its strategic focus on our category. We look forward to working with Leprino Foods to build on our success as a trusted supplier and business partner to our customers in the pizza category across the UK and Europe," he said.

Subject to the completion of due diligence and execution of definitive agreements, it is expected that the potential transaction will close in the first half of 2023.

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In its annual results the Irish-based international food giant says that as part of an on-going focus on optimising its portfolio, it had signed a non-binding memorandum of understanding for the sale of its 50% holding in Glanbia Cheese EU and 51% holding in Glanbia Cheese UK (collectively the “Glanbia Cheese JVs”) to Leprino Foods Company.

It added that based on preliminary results for both companies, the Glanbia Cheese JVs, which includes revenue raised from sales of products made in Laois, contributed approximately €7.3 million to the share of profit after tax of Glanbia equity accounted investees in 2022 (2021: €0.3 million).

It is expected that Glanbia will receive initial cash proceeds in excess of €160m (including the repayment of shareholder loans), with further contingent consideration of up to €25m dependant on the performance of the Glanbia Cheese JVs over the next three years.

Subject to the satisfactory completion of limited confirmatory diligence, the negotiation of binding transaction agreements and other conditions, it is expected that the deal will close in the first half of 2023.