Sale of 'underperforming' UK unit lifts Glanbia shares

Agribusiness group Glanbia has sold its British food distribution group in its latest withdrawal from the British market. Glanbia Food Service employs 500 people and had a turnover last year of £100 million sterling (€155.6 million).

The unit has been bought by Peter's Food Service - a firm similar in size to Glanbia and covering the same food manufacturing and distribution operations for restaurants, pubs and cafes - for an undisclosed sum, which was described as "not substantial".

Glanbia Food Service has net assets of approximately €15.6 million.

Glanbia will book an exceptional charge of €23.8 million as a result of the deal, mainly relating to goodwill previously written off. The deal is expected to be completed by early August.

The British food service distribution business has been disappointing for the group in recent years.

"It has been an underperformer in the group," said a spokesman. "Essentially, we had a large logistical structure with too much excess capacity. Peter's Foods will now use our system."

Glanbia group managing director Mr John Moloney said the move followed a strategic decision by the company to leave logistics in Britain. "The UK food service supply sector is evolving into two distinct streams of activity - manufacturing of bespoke food products and the provision of separate, dedicated logistics services," said Mr Moloney. "This move allows Glanbia to focus on our strengths as a food manufacturer."

The spokesman said the company's food manufacturing operations in the Britain were performing well.

Glanbia has agreed terms with Peter's Foods under which it will distribute Glanbia's food products for the next few years. Glanbia will also be able to supply other distributors and has indicated it will pursue that opening aggressively.

A spokesman said the majority of the food service sector it supplies is now group-owned, making it more difficult to make a decent profit from logistics.

The deal went down well with the market, where Glanbia shares rose almost 3 per cent, making it one of the few to gain on a day when the Dublin market lost more than 3 per cent.

Earlier this year, Glanbia closed two plants in England, with the loss of more than 700 jobs, as it exited the troubled cooked meat business.

It also withdrew three years ago from the liquid milk business in Britain, selling its dairy operations for €152 million.