Result is neither fish nor fowl, leaving sour taste in all mouths

Many farmers viewed the deal as a no-win situation. The outcome is an unhappy one, writes Suzanne Lynch

THE SIGNS were never good. As thousands of farmers descended on the picturesque village of Kildalton in south Kilkenny yesterday, it was clear that Glanbia plc had a tough job on its hands to convince their co-op’s shareholders to back the €343 million buy-out which would have seen the farmers retake direct control of the company’s Irish dairy business.

Outside the grounds of Kildalton College, a herd of Friesian cows lazed in the sun, a scene that seemed straight out of an Avonmore advert.

Inside the grounds, the mood was far from relaxed. As farmers filed into the purpose-built marquee, the atmosphere was one of quiet apprehension.

“It’s a lose-lose for farmers whatever way you look at it,” one shareholder said, himself the chairman of a beef co-op.

“If we stick with the plc, the profits will continue to be focused on the big investors, not the farmers, but if we buy the business, we are completely over-paying.”

The story was the same among other voters. “Doubtful” was how one Cork farmer descried the chances of the deal being passed. “Dicey” said another. Even those who said they were backing the deal were doing so reluctantly.

“What can we do? It will be in the best interests, but I can’t see it making a difference in terms of milk price.”

In the end these misgivings were borne out. Despite the plc’s major communications drive in recent weeks to convince its co-op members at dozens of meetings across the State of the benefit of the sale, a sufficient majority failed to be convinced.

The reportedly rousing speech by two former IFA presidents, Thomas Clinton and Padraig Walshe, at yesterday’s meeting also failed to get the deal over the line.

For the board of Glanbia – all of whom were in favour of the deal – the vote was frustratingly close, although they will surely be asking themselves hard questions as to why only half of the eligible voters turned out.

The perception that the price-tag was too high seemed to be one of the main sticking-points for farmers. However, there was also an element of fear – having grown accustomed to their unhappy bedfellow, it seemed that farmers were just not ready to go it alone.

The result was in fact the worst possible outcome, with the proposition narrowly defeated, but a vast majority of co-op members plus the entire board in favour of a de-merging.

Liam Herlihy yesterday insisted that there was “no plan B”. If that is indeed the case, the big question will be how the board and management will pick up the pieces and maintain the credibility of a company which is now stuck with a reluctant and unwanted division.

In light of reported tensions within the board, it will also be interesting to see if the current directors can possibly work together.

Yesterday’s result poses serious questions for Glanbia. The market will want answers.