Glanbia plc and Glanbia Co-op have signed a non-binding memorandum of understanding for the sale of the Plc's 40pc interest in Glanbia Ireland (the Co-op) for €307m, it has been announced.
Currently, Glanbia Ireland operates as a strategic joint venture, 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.
The sale is subject to the successful conclusion of contract negotiations and the relevant shareholder approvals within both Glanbia plc and Glanbia Co-operative Society.
Chairman of Glanbia Co-op John Murphy said they are driven by an ambition to pay the best possible price for milk and grain to their 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,” Mr Murphy said.
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 Group Managing Director Siobhán Talbot will today, Wednesday, step down from the Board of Glanbia Co-op. The Board has appointed Jim Bergin to the role of Glanbia Co-op Chief Executive.
Responding to the Glanbia announcement, ICMSA President, Pat McCormack, said that the association would look carefully at the proposal before coming to any decision on whether to recommend it or not.
Mr. McCormack noted Glanbia PLC’s enthusiastic and positive vision of a post purchase future where the Co-op became ‘one of Europe’s top Co-ops’ with an ‘award-winning portfolio of brands’ and greater flexibility to support members and pursue new opportunities. All of which was possible, according to Mr. McCormack, but was in no way conditional on the Co-op acquiring full ownership of Glanbia Ireland.
“Though there are obvious differences with other buy-outs and various mergers, there’s enough in common to justify our Association taking its standard attitude and that is to ask what is the long-term interests of the farmer-suppliers. That’s our starting point and our finishing point.
"With due respect to both the PLC and Glanbia Ireland, we will consider this in terms of how it affects the farmers. It’s not as simple as giving the farmers the room to decide their own milk price, we have seen over in the UK how a deceptively simple slogan like ‘Taking Back Control’ is actually a much more complex proposition than seemed at the time. There will be arguments for and arguments against and ICMSA will decide on a position after carefully looking at both”, said Mr McCormack.
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