Watchdog clears €10m CMP sale to Glanbia

GLANBIA’S proposed deal to buy CMP liquid milk, cream and juice business from Dairygold Co-Op has ben cleared by the Competition Authority.

The agreement is worth just over €10 million to the North Cork-based dairy, which published results for 2004 yesterday that showed substantial losses for the second year running.

Glanbia announced the deal in early February, resulting in the loss of 100 jobs at Dairygold’s CMP plants.

Dairygold’s 130 milk suppliers will continue to supply Dairygold, and Dairygold will sell the 6.15 million gallon liquid milk pool on to Glanbia.

Under a separate deal, the two companies indicated they had agreed, in principle, to enter into a contract manufacturing arrangement for parts of their respective milk processing operations.

It was announced at the time that Dairygold will supply a volume of cream to Glanbia every year from 2005 on, to be used in manufacturing Dairygold butter and butter oil at Glanbia’s Ballyragget plant.

Glanbia will also purchase whey from Dairygold for processing.

From 2006, Glanbia will supply Dairygold a volume of milk for manufacturing into Glanbia dairy products at Dairygold’s Mitchelstown plants.

Jerry Henchy, chief executive, Dairygold, described the deals with Glanbia as a “highly significant development for the business” in what he said was a “groundbreaking co-processing arrangement with Glanbia.”

CMP was sold to Glanbia on the grounds it was “too small to be a player in the liquid milk business.”

He said the improved efficiencies would greatly assist Dairygold in realising its goal of becoming Ireland’s most efficient and lowest cost milk processor.

From a Glanbia perspective, the deal also made financial sense because the Kilkenny based group has surplus capacity.