History created as Glanbia co-op members vote to ratify €224 million share spin-out and sale

IN the end, the decision by farmer-shareholders in Glanbia Co-op to sell 10% of their stake in Glanbia Plc came down to ensuring that a new company set up to run the Irish milk processing operations of Glanbia is properly financed and to avail of a share spin-out of €159 million giving an average of €15,000 to each co-op member.

IN the end, the decision by farmer-shareholders in Glanbia Co-op to sell 10% of their stake in Glanbia Plc came down to ensuring that a new company set up to run the Irish milk processing operations of Glanbia is properly financed and to avail of a share spin-out of €159 million giving an average of €15,000 to each co-op member.

That’s the message given to Sean Keane as he interviewed co-op shareholders after the historic vote in Gowran Park race course on Wednesday evening.

After an anxious wait there was jubilation when the chairman of Glanbia, Liam Herlihy announced that the shareholders in Glanbia Co-op had voted by 83% to ratify their earlier decision to dispose of 10% of its holding in Glanbia Plc. The result means the co-ops stake in Glanbia Plc, will be diluted from 51% to 43%.

The turn-out at Gowran park was 4,522 and 3,975 said yes which is over 1% more than the majority achieved at the first vote which also required a 75% majority. Members of the co-op will now receive a €157 million windfall. The other 3% which members voted to dispose of will go towards strengthening the new joint venture company which will run the Glanbia milk processing business in Ireland. There were only a few hundred people left in the giant marquee at Gowran Park racecourse at 6.15pm when the news was read out and management hugged each other as Mr Herlihy got to the podium.

For once group managing director of Glanbia Plc, John Moloney said he was caught for words. “This is a humbling experience because Plcs are normally about creating value for shareholders and today through this decision we have really connected with the beneficiaries of the decision, the shareholders in the co-op. It is really satisfying that we could achieve this and give them, the people that made this co-op and company something back,” he said with the emotion etched on his face.

He said the decision provided the co-op with great opportunities and was a good day for the farmers in the south east and beyond. “This value in real monetary terms is being sewn back into farms and into the pockets of farm families,” he said. He added that it was now up to the co-op to drive on.

The new MD of the joint venture company which will control the country’s largest milk pool, Mr Jim Bergin, was equally optimistic about the future of the new company which will control the Irish dairy section of Glanbia and is 60% owned by the Co-op and 40% by the Plc.

“The decision today and specifically the one to strengthen the new joint venture’s balance sheet by E30 million will give the new entity and the farmers who own it, control of their own destiny,” the Freshford born UCC graduate said. He maintained that with a steady income stream, the future was bright for the joint venture he will head. “We are starting off on the best possible footing and are well positioned to take advantage of any new opportunities.”

In a breakdown of the vote, approval was obtained from 82.16% of A1 and A4 members, 78.95% of active milk suppliers and 83.35% of A1, A2 and A4 members . Following the share spin-out and sale, the Society will hold a 41.4% stake in Glanbia Plc worth over €920 million.

The ballot was conducted independently by the Irish Co-operative Organisation Society (“ICOS”). A second resolution designed to preserve long standing arrangements within the rules was also approved by members – with 78.5% of A1 and A4 members approving this resolution. Glanbia chairman, Liam Herlihy said the vote concluded an historic and transformative process for the co-op and its members. “ Members will directly hold €157 million of value in Glanbia Plc and the co-op has the benefit of having cash resources, a 60% direct stake in a world class dairy business and 41.4% of Glanbia Plc. This is a fitting return for members’ investment over many years and for their unprecedented commitment, goodwill and support during this approval process,” Mr Herlihy said. All share price values are illustrative based on the share placing price of €7.60 on 28 November, 2012.

Vote Outcome

Share sale and spin-out resolution

A1 and A4 members - 82.16% yes, 17.84% no

Active milk suppliers - 78.95% yes, 21.05% no

Resolution 2:

Internal changes to Society rules

A1 and A4 members - 78.50% yes, 21.46% no