Glanbia Co-op, which owns nearly 55 per cent of Glanbia, has rejected proposals from a group of milk producers to take the company private.
Fresh Milk Producers (FMP), which represents around 1,400 farmers who supply around one-third of Glanbia's milk pool, presented a proposal to the co-op board in June, suggesting it use debt funding to buy back the 45 per cent of Glanbia it does not own.
However, after considering all aspects of the suggestion, the co-op board - which comprises 14 farmer directors and Glanbia chief executive Mr John Moloney - rejected it as not being "in the best interests of its members".
"The board remains fully committed to the group's strategy of developing strong international positions in cheese, nutritional ingredients and consumer foods with a nutritional emphasis, and believes that this is best achieved through the existing structure," it said in a statement yesterday.
A Glanbia spokesman added that, based on the current share price, a move to take the company private could cost in the region of €350 million and would saddle Glanbia with debt.
"It would turn the clock back," he said.
However, FMP chairman Mr Eamonn Bray called on the co-op to re-evaluate the proposal to turn the company back into a farmer-owned co-op, saying the timing was right for such a move.
"Farmers must retake control of their industry to ensure they derive maximum returns for their produce," he said.
He said the benefits of converting Glanbia from a plc into a co-op included "a complete shift in current shareholder focus under the current public company structure, where dividend yield and growing shareholder value are of overriding importance, usually at the expense of milk and commodity prices, to one that is fully aligned with maximising the returns to active farmer members."
While FMP said that it did not intend to make a bid for Glanbia, it hopes to enlist support from the 15,000 farmer members who make up the co-op to persuade the board to change its stance.
"We hope to go out on the high road and bye-roads of Glanbia country," Mr Bray said yesterday.
Shares in Glanbia closed nine cents higher at €1.88 last night but analysts said the suggestion from the milk producers was unlikely to come to much.
"The proposal reflects the discontent among liquid milk suppliers," one analyst said.
The analysts attributed the strength of the share price, which is at a four-year high, to the steady progress the company has made in recent years in cutting its debt and selling underperforming businesses.
Earlier this month, it sold its fresh pork business in the UK for around €11 million. It also announced plans to embark on a $170 million (€152 million) joint venture with two of the US's biggest milk suppliers, which will make it the number one producer of cheddar cheese in the United States.
