Farmers vote on Glanbia buyout

FARMER shareholders of Glanbia Co-op will vote today on the proposed €340 million buyout of the Irish dairy business from the Plc in which it holds over 54% of the equity.

The co-op says farmers are eight to one in favour of the deal.

At some meetings farmers have questioned why the co-op has failed to publish its annual report for last year in advance of the crucial vote. Some in the Laois area have raised questions about the non-publication of the report, normally published in April.

They were told it would not be put into the public domain before today’s vote.

In Britain, Barry Wilson, publisher of the fortnightly publication Dairy Industry Newsletter, the world’s largest-selling newsletter serving the milk production, processing and trading industries, said the deal was not in the best interest of farmers.

Mr Wilson told the Irish Examiner farmers were paying way over the odds for a low-margin business the Plc is happy to sell on.

Farmers are carrying “all the risk and will be without the leadership of the Glanbia Plc chief executive John Moloney if they vote yes.

The co-op is saying the deal is reasonable, “but I don’t think it is”, he said.

The Plc will come well out of the deal, “but the co-op is paying a very full price” for the Irish dairy business, he said.

They will also have to come up with €140m of working capital and face a pension deficit of up to €85m, he said.

Wilson, who has extensive knowledge of the global dairy industry, said the co-op would be “more efficient and more profitable under Plc control”.

It was wrong also to suggest that the co-op/Plc model does not work elsewhere. Glanbia was not “unique” last year as a Plc in having to support farmers through a tough year.

He described farmers as “romantics who want to run their own plants and to make a good job of it.”

They are unaware of the risks in terms of milk price down the line. One of their arguments in support of the buy out is that post-quota farmers can produce a lot more milk.

That of itself could depress the milk price and in times of weak demand make a bad situation even worse, which “is not what this move is supposed to be about”, he said.

“Farmers could justify it (the deal) if they could get it at a knock down price,” he said.

“It’s a hell of a good deal for the Plc,” while farmers are being asked to buy into this proposition without knowing who the new chief executive is going to be.

Liam Herlihy, chairman of Glanbia, who is fully behind the move, said in a recent statement: “It will create a very substantial business focused entirely on members’ needs and will be well placed to exploit the growth opportunities that will invariably present themselves in the future.

“The board of the society is unanimous in recommending this proposal to members”, he said.