Glanbia plc has announced its intention to sell its 40% holding in Glanbia Ireland to Glanbia Co-op for €307 million.
Glanbia Co-operative Society Limited has signed a non-binding memorandum of understanding for the sale of the PLC’s 40% interest in GI.
Subject to appropriate board approvals, it is expected that binding legal agreements relating to the proposed transaction will be executed by the parties by early 2022.
The proposed transaction is consistent with the PLC’s strategy to focus on its two growth platforms, GPN and GN, as well as strategic joint ventures.
The PLC will increasingly focus on its global nutrition strategy as a brand owner and provider of value-added nutrition solutions, serving “high growth” markets.
The proceeds from the proposed transaction will be primarily invested in growth opportunities, with up to 50% of the proceeds being returned to shareholders via a share buyback.
The PLC will contribute €8 million related to pension, rebranding and separation costs in connection with the proposed transaction.
In addition, it is agreed that GI will not be required to pay the dividend payable to the PLC in 2022 in respect of the 2021 financial year (estimated at €14 million) and up to the closing of the proposed transaction.
Up to 50% of the consideration payable for the proposed transaction will be funded by the co-op through the sale of shares in Glanbia plc (estimated at approximately 11.5 million shares), with the balance to be funded through borrowings.
Spin-out of shares to members
Glanbia Co-op also proposes to transfer, via Share Spin Out, 12 million Glanbia plc shares to all existing members of the society.
Based on the plc’s closing share price of €13.98 on November 9th, 2021, this would be worth approximately €168 million, or €11,028 for a member with an average shareholding.
This follows the spin-out of a total of 36.5 million Glanbia plc shares worth over €510 million by Glanbia co-op in 2013, 2015 and 2017.
The co-op proposes to create an Investment Fund, which will be available to pursue new opportunities for the co-op.
This fund will be activated, when required, at a future date through the placement of up to 12 million Glanbia plc shares (value of €168 million at current share price).
Following the completion of the Glanbia Ireland transaction (4%) and spin-out of PLC shares to members (4%), Glanbia Co-op’s shareholding in Glanbia plc will be reduced from 32.4% to approximately 24%.
In the event that the full Investment Fund is deployed, Glanbia Co-op’s shareholding in Glanbia plc would be reduced to approximately 20%.
At the forthcoming Special General Meeting (SGM), the Board will also seek to retain the existing 3% contingency around the threshold for general business purposes.
Siobhan Talbot, group managing director of Glanbia plc, said:
“Today’s announcement represents the next stage of our transformation journey following many years of successful collaboration with Glanbia Co-op as joint venture partners in Glanbia Ireland.”
“If approved, the proposed transaction will continue the alignment of our portfolio to our strategy, which is focused on driving growth through our market-leading positions as a brand owner and ingredient solutions provider, playing into strong underlying consumer health and wellness trends.”
“We expect to deploy the capital received from the proposed transaction in investment to drive further growth and to return capital to shareholders.”
Commenting today, Donard Gaynor, chairman of Glanbia plc, said:
“Glanbia Ireland has a successful heritage. For many years, we have valued the partnership with Glanbia Co-op in creating a strong business under our joint stewardship.”
“This is the right time for the proposed transaction. The co-op is the right owner to continue the strategic development of Glanbia Ireland for the benefit of the co-op’s members.”
“The PLC can continue to maximise the opportunities for its own business in the post-Covid environment, with our focus on health, wellbeing and nutrition.”
Well-invested and future-focused
Chairman of Glanbia co-op, John Murphy said:
“These proposals are driven by our ambition to pay the best possible price for milk and grain to our 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.”
He said the board believes that now is the right time to take this step to create a “well-invested, independent and future-focused” co-op.
“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.”
Natural evolution to a pure co-op
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.”
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