Glanbia to consult members on defeated takeover plan

GLANBIA CO-OP will start a consultative process with members this week on the proposal to buy the company’s Irish dairy division from the listed Glanbia plc – a move that was defeated by co-op members on May 10th.

Speaking at the company’s annual meeting in Kilkenny yesterday, Liam Herlihy, who is chairman of both the co-op and the listed business, said the co-op would be reviewing the issue with members through their representative structure, a process that could take “a month of so”.

While Mr Herlihy stressed that there was “no Plan B” and that the process had concluded, he said “it is only right and proper” that a “postmortem” should take place.

However, he insisted there were no plans to change the Glanbia co-op rule, which stipulates that 75 per cent of votes are necessary for the co-op shareholding of the listed business to go below 51 per cent. The proposed buy-back deal was supported by 73 per cent of co-op members. Glanbia Co-op is the only co-operative in the country with such a rule.

Around 120 shareholders attended what was a low-key AGM in Kilkenny yesterday. In an upbeat address, chief executive John Moloney said the company was experiencing a “very strong” first half. It expects growth in earnings of 15 per cent for 2010.

Due to falling milk prices and the global recession, he said, 2009 had been an “unprecedented year” but the recent recovery in global diary markets had led to a significant improvement in the group’s operating environment.

The company’s US cheeses and global nutritionals sector had performed particularly well in 2009. Mr Moloney said the company expects growth in this sector to outpace the 6-7 per cent growth per annum experienced in recent years.

China presents particular opportunities for the company, he said, and it would “continue to look at opportunities in the medium term”.

On the subject of milk prices, Mr Moloney said he expects the current milk price of 28 cent per litre to be sustainable, and that “further positivity” around prices was possible.

Addressing the rejection of the proposed deal to sell the Irish dairy division to Glanbia co-op, Mr Moloney said the plc would await the feedback from the co-operative. Should the co-op come back with a proposal, the plc would reflect on that.

He rejected a suggestion that the deal was a “distraction” for the company, stressing that it was “business as usual”.

Mr Moloney said the cost of the proposal to the plc was less than half the €6 million-plus that had been estimated as the total cost of the original proposal.

Mr Herlihy said he had no regrets about proposing the buy-back deal.