Glanbia has conditionally agreed to sell its Irish dairy and agri businesses to Glanbia Co-operative Society, only weeks after it confirmed it was in talks on the proposed disposal.
The deal will be worth about €343 million, including the proceeds of the placing of 102 million Glanbia shares held by the co-op, with a risk sharing mechanism that will adjust the value, and cash of €49.7 million.
As part of the deal, the society, which owns 54.6 per cent of Glanbia, will get three business units: dairy ingredients Ireland, consumer products and agribusiness. Glanbia Estates, group business services and Irish joint ventures and associates are also included in the sale.
The agreement will cut the society's share of Glanbia to 20 per cent immediately after the sale, which is expected to be completed by June 15th. This holding will be reduced by half again to 10 per cent by September 2010.
"In a changed global dairy market environment, the time and opportunity is now at hand to recognise and embrace the need for transformation," said managing director John Moloney.
"This transaction provides the prospect of reshaping the business and unlocking growth and development potential for both the society and the company. For Glanbia it has compelling strategic logic and creates a focused business with a well established growth strategy, underpinned by improved financial flexibility. For the society, achieving full control of the Irish dairy and agri businesses, will create a dynamic organisation focused on driving growth and development for farmer members."
In March, the Kilkenny-headquartered company posted a fall in profit and revenue for 2009. Pre-tax profit declined 19 per cent to €97.4 million in the year ended January 2nd, 2010, while revenue dipped 18 per cent to €1.8 billion over the same period.
Adjusted earnings per share fell 14.4 per cent to 30.68 cent, while dividends were increased by 5 per cent to 6.84 cent per share.
Revenue at the company's Irish dairy division fell by 23 per cent in the year to just over €1 billion. Operating profits fell more than half to €24 million.
Chairman of Glanbia Liam Herlihy said the deal was a unique opportunity for the society to build a new strategy, structure and business model that best serves the interests and needs of members.
"In particular, there is an exciting opportunity to expand Irish milk output in the context of emerging changes in EU regulation of the industry," he said.
"Gaining ownership and control of key strategic Irish assets puts members in an excellent position to capitalise on these changes and the board of the society looks forward to the successful completion of this transaction and to building a sustainable future for all our members."
