Glanbia’s plc and co-operative sale

Glanbia plc and Glanbia Co-operative Society Limited have announced they have signed a non-binding memorandum of understanding for the sale of the PLC’s 40% interest in Glanbia Ireland DAC to Glanbia Co-op for a purchase price of €307 million.

Commenting, Donard Gaynor, chairman of Glanbia plc said: “Glanbia Ireland has a successful heritage, and for many years we have valued the partnership with Glanbia Co-op in creating a strong business under our joint stewardship. This is the right time for the proposed transaction. The Co-op is the right owner to continue the strategic development of Glanbia Ireland for the benefit of the Co-op’s members, and the PLC can continue to maximise the opportunities for its own business in the post-Covid environment, with our focus on health, wellbeing and nutrition.”

Siobhan Talbot, group managing director of Glanbia plc, who is set to retire from her position on the co-operative when the transaction is completed, says, “This announcement represents the next stage of our transformation journey following many years of successful collaboration with Glanbia Co-op as joint venture partners in Glanbia Ireland. If approved, the transaction will continue the alignment of our portfolio to our strategy, which is focused on driving growth through our market leading positions as a brand owner and ingredient solutions provider, playing into strong underlying consumer health and wellness trends. We expect to deploy the capital received from the transaction in investment to drive further growth and to return capital to shareholders.”

The PLC will increasingly focus on its global nutrition strategy as a brand owner and provider of value added nutrition solutions, serving high growth markets.

The proceeds from the proposed transaction will be primarily invested in growth opportunities with up to 50% of the proceeds being returned to shareholders via a share buyback.

Key terms from the MOU are as follows:

• Transaction consideration fixed at €307 million, expected to be paid in cash, and not subject to any adjustment mechanisms post completion. If the proposed transaction completes, GI is not required to pay any dividend to the PLC in respect of the 2021 financial year or otherwise, prior to completion.
• GI and the Co-op will change their respective names following a transitional period post completion to names which do not include “Glanbia.”
• The PLC will fund costs of €8 million to be incurred by GI, related to pension obligations, separation and rebranding costs in connection with the proposed transaction.
• Post completion of the Proposed Transaction certain corporate, business and IT services will continue to be provided by the PLC to GI for a defined period.
• GI will maintain certain commercial arrangements with the PLC for the sale, purchase and agency of various products until the GI name change has been implemented.
• Within one year of completion of the proposed transaction, all amounts owed by GI to the PLC in respect of an existing shareholder loan of €28.8 million will be satisfied, (which repayment is in addition to the consideration payable for the proposed transaction).
• On or before completion of the proposed transaction all PLC representatives on the boards of GI and the co-op will retire and
• Effective immediately the PLC group managing director will retire from her position on the board of the co-op.

Glanbia has been informed by the co-op that it intends to finance up to 50% of the proposed transaction through the sale of shares it owns in the capital of the PLC, with the balance to be funded through borrowings.

Furthermore, the co-op intends to transfer via a spin out to its members up to 12 million shares it owns in the capital of the PLC. These proposals will be subject to a co-op member vote at its AGM.

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