Shareholders vote for dairy joint venture

Shareholders in Glanbia Co-op opted for a new era in milk processing when they voted by 70.8% to 29.2% in favour of creating a joint venture dairy operations with Glanbia PLC which will see individual co-op members get their hands on a share-out of €160m on PLC shares.

It also paves the way for milk expansion after the EU quota system expires in 2014 and an investment of €180m, which is expected to bring an extra €500m per annum into the Irish economy by 2020, according to Ernst & Young.

The turn-out of 77% of those entitled to vote was described as staggering by Glanbia PLC spokesmen. Two more votes by co-op members are required to approve diminishing their shareholding in the PLC; paying for the milk processing costs associated with the new factory in Belview on the Kilkenny-Waterford border; and allowing for a spin-out of PLC shares among co-op members worth €160m at today’s share price.

All that is needed for the joint venture to be implemented is ratification by a majority vote of the Glanbia PLC shareholders at an EGM scheduled for next Tuesday, Nov 20, which is expected to pass.

Subject to approval at the EGM, the joint venture will be operational from Nov 25, with new CEO Jim Bergin taking up the job on that date.

Group managing director John Moloney did not agree that the campaign leading up to the vote had been divisive, but did say there had been a “minor level of scaremongering”. He declined to say who was responsible for scaremongering.

He felt confident the 75% majority needed at the next votes by co-op members would be forthcoming. He said it was important to keep in mind that shareholders were doing something for themselves and their co-op.

Mr Moloney said the first of the votes would, if successful, put more capital in the joint venture, placing the co-op in a strong position, matched by funding from the PLC.

He said the second vote would transfer 7% of the value of the PLC out to the co-op members and that at today’s share price was €160m.