Crucial vote looms for Glanbia shareholders
The plc failed two years ago to sell its Irish dairy processing business to the co-op, whose members voted just 2% short of the 75% required to approve the €343m deal.
Approval by 75% will also be needed for the joint venture now under discussion.
But a vote is unlikely before next autumn, with the plc saying discussions with the co-op won’t be concluded on target, and may not be finished until September.
The joint venture project is expected to need €200m to build new processing capacity — which raises the possibility of the co-op selling some of its 54% shareholding in the PLC to raise its share of the investment. At current prices, it could raise more than €40m while retaining 50% of the plc.
IFA president John Bryan urged the co-op to be ambitious in their final discussions and ensure that dairy farmers are put firmly back in control of their industry.
The joint venture is seen by the plc as a way to fund the extra processing capacity for milk from the nearly 50% of Glanbia’s farmer suppliers who have indicated they will expand, when EU milk quotas are removed in 2015.
Already the largest milk processor in Ireland, and generating annual revenues of about €700m, Dairy Ingredients Ireland as a joint venture would also facilitate full concentration by the plc on its global cheese and nutritionals business, boosted by the proceeds from the sale of its 60% interest, and less exposed to volatile milk markets.
The joint venture can also be significant for the Irish milk processing sector, if it sparks off a money-saving consolidation involving other co-ops.
The joint venture’s proposed new plant at Belview, South Kilkenny, will be about two-thirds the size of Glanbia’s Ballyragget plant, already the largest integrated milk plant in Europe.
It would employ 100 full-time, and 400 jobs during construction, and the proposal has been welcomed by Environment Minister and Kilkenny TD, Phil Hogan.
