Glanbia Society votes ‘Yes’ to joint venture in historic 77% turnout

Circa 71% of Glanbia Society members have voted in favour of the resolution to acquire majority ownership of Glanbia’s dairy processing business (GII) as part of a joint venture with Glanbia plc.

Circa 71% of Glanbia Society members have voted in favour of the resolution to acquire majority ownership of Glanbia’s dairy processing business (GII) as part of a joint venture with Glanbia plc.

The result of the ballot, conducted independently by the Irish Co-operative Organisation Society, was announced after 5,931 farmers cast their votes yesterday, representing a historically high 77% turnout.

Completion of the Joint Venture (Society 60% : plc 40%) which plans to invest €180million in new and enhanced milk processing facilities is conditional on approval by way of an ordinary resolution of Glanbia plc shareholders (excluding the Society,) at an Extraordinary General Meeting of Glanbia plc scheduled for Tuesday, 20 November 2012. Subject to approval at the EGM, the joint venture will be operational from November 25 this year.

Society Chairman, Mr Liam Herlihy described the decision by members to approve the joint venture as a significant milestone for dairying in Ireland.

“Today’s vote, which emerged from an historic turnout, paves the way for the most significant expansion of dairying in a generation. It provides majority ownership of a world class business by the Society and a structure that is more focused on farmer needs.

“I would like to thank all those who voted and who participated in a very open discussion and debate on how best to realise the opportunities arising from the abolition of milk quotas. Now that the members have voted for the formation of the JV, the next logical step would be to support the share spin-out and sale at the upcoming Society General Meetings. By approving the sale of an additional 3% equity (value c. €70million as at 13 November 2012), GII will start out with an even stronger balance sheet and the Society will be well placed to become debt free as soon as 2013. In addition, the spin-out of 7% of shares to farmers (value c. €165million as at 13 November 2012) enables members to hold or sell plc shares, depending on their individual circumstances,” Mr Herlihy commented.

The Joint Venture transaction incorporates the business and assets of Dairy Ingredients Ireland (DII), a business unit of the Dairy Ireland division of Glanbia, including its 45% share of the Corman Miloko Ireland JV and its 23% shareholding in the Irish Dairy Board. Under the proposed transaction, the new joint venture, to be known as Glanbia Ingredients Ireland will be 60% owned by the Society and 40% owned by Glanbia. The business, net fixed assets, working capital and liabilities of DII will be transferred to the joint venture, which will also assume the relevant pension obligations of DII.

 The existing DII business is the largest dairy ingredients processor in Ireland, assembling a milk pool of 1.6 billion litres and processing it into c.180,000 tonnes of dairy ingredients largely for export to over 50 countries worldwide. In 2011, DII generated revenue of €738million, operating profit of €33million and EBITDA of €44million.