SEASONED commentators have been stunned by the margin of victory in the balot by shareholders of Glanbia Co-op to dilute their interest in Glanbia Plc by 10% and to cash in on €225 million worth of shares. The vote was 81.2% to 18.8% in favour of decreasing its stake in Glanbia Plc from 51% to 41%% writes Sean Keane. The co-op required 75% of shareholders to vote for it so they did it with over 6% to spare. There is one more vote to go on December 12 to ratify today’s vote but this is not expected to be a problem.
The co-op will now use 3% (E70 million) of the shares in the Plc to strengthen the balance sheet of the co-op in the wake if its decision two weeks ago to create a new joint venture between the Co-op (60%) and Glanbia Plc (40%) to look after all aspects of Glanbia’s milk production including the Ballyragget and Virginia milk processing plants and a new one to be constructed in Belview, South Kilkenny. The remaining 7% will be given to co-op shareholders and will mean an average of €15,000 each.
The vote in Gowran Park was attended by 4,500 farmers and when the result of the vote was announced by Glanbia chairman, Liam Herlihy there was sustained applause from the farmers who had stayed behind to hear the result.
The decision has been warmly welcomed by Kilkenny man, John Bryan, president of the Irish Farmers’ Association (IFA) who urged both the co-op and Plc to ensure that this positive decision is confirmed by an equally strong ‘yes’ vote on December 12 in ratification ballot of today’s result.
“I believe this decision by Glanbia shareholders will considerably strengthen the financial outlook of the new Glanbia Ingredients Ireland (GII) the new joint venture between the co-op and the Plc.. It will also strengthen the Plc by allowing it to focus on lucrative international nutrition markets, benefiting the Co-op which retains a sizeable 41% dividend earning and controlling share,” he said.
IFA National Dairy Chairman Kevin Kiersey, who also strongly supported a ‘yes’ vote, said: “The formation of GII, and the additional equity injection which this and the next vote would allow, represent a significant development for Glanbia farmers. However, it is only a first step, and it should be built upon to increase industry collaboration as we move towards 2015. I urge GII, and other processors, especially neighbouring co-ops, to engage fully in detailed planning to foster greater efficiencies and integration for the benefit of the entire sector, and milk prices to producers,” he concluded.
Last year, the Plc was unsucessful in decoupling itself from its Irish operations by 2% when 73% of co-op members voted in fvour of the deal. it required a 75% majority.
Today, 81.8% of A1, A2 and A4 members and 77.1% of milk supplier members of Glanbia co-op who attended and voted at the Society General Meeting , voted in favour of the resolution for a share spin-out and sale.
Commenting after the vote, Glanbia chairman, liam Herlihy said the proposal was the first step in the process of giving value back to co-op members who created the Glanbia organisation. “On behalf of the co-op Board I welcome today’s result as a solid endorsement of the Board’s proposal. The commitment of farmers who turned out yet again to vote in such huge numbers is commendable.
“Securing the support of 81.8% of members attending and voting on the day is a tremendous achievement, but to be effective it requires another 75% approval at a confirmatory vote on December 12. I am now calling on all members to re-double their efforts to attend and vote, so that the benefits of the share spin-out and sale can be realised.
“A yes vote on December 12th will give our newly established joint venture, Glanbia Ingredients Ireland (“GII”), a strong start; it will put cash into the Society which will give it the flexibility to provide a wide range of options for members, and it will distribute c €157 million of plc shares to members. In addition, based on the current share price, the Society’s shareholding in the plc will be worth close to €1 billion” Mr Herlihy added.