Co-op members back Glanbia deal

Glanbia plc’s plan to set up a joint venture with its co-op has cleared the first hurdle, with 71 per cent of co-op members voting to take majority ownership in the new entity – Glanbia Ingredients Ireland.

Their vote also means co-op members have reduced their share in the plc by 3 per cent, to 51 per cent. Some 77 per cent of members – or 5,931 farmers – voted on Tuesday. The result was described by Glanbia chief executive John Moloney as “an historic outcome” that would place the milk processing assets back under farmers’ control.

“In any walk of life today, even if we judge recent events in Ireland, to get 71 per cent endorsement of a 77 per cent turnout for any proposition to an electorate is hugely significant. It’s an unequivocal, strong, democratic decision.”

The votes were counted by the Irish Co-operative Organisation Society in Kilkenny yesterday morning.

The result gives the co-op a 60 per cent share in Glanbia’s dairy ingredients business, which will be known as Glanbia Ingredients Ireland. This includes cream, cheese, butter for the Kerrygold brand and ingredients such as whey and lactose. The joint venture will involve the building of a new €180 million plant at Belview, on the Waterford-Kilkenny border.

What happens next

The next step in the complex process involves two more votes to allow the co-op’s share in the plc to go under 50 per cent. It will fall to 41 per cent if the votes are carried, with the shareholding going to co-op members and the co-op.

Yesterday’s result needed a 50 per cent majority, but that threshold increases to 75 per cent in the next two votes.

Mr Moloney said 75 per cent was “a high hurdle” to cross but was necessary under co-op rules. By agreeing to drop their share in the plc to 41 per cent, co-op members will get a spin-out of 7 per cent of shares, worth about €165 million, while the co-op will get shares worth about €70 million.

Asked if he had expected the run-up to the vote to be as divisive as it was, Mr Moloney said: “It depends on how you define divisiveness; we had very good debates at all the meetings.”

There was “a minor level of scaremongering but apart from that, the debates were very good and when you get a turnout of 77 per cent it means the people entitled to vote were massively engaged by the process and voted overwhelmingly in favour of it”.

Glanbia co-op’s chairman Liam Herlihy said the outcome was “a significant milestone for dairying in Ireland”. IFA president John Bryan said the strength of the Yes vote reflected the fact that the proposal was balanced and fair.