Glanbia Co-op is “keeping an open mind” on its future business ventures once the deal to acquire full ownership of Glanbia Ireland (GI) is finalised.
Both the co-op and Glanbia plc announced last week that they had agreed to the former buying out GI, in a deal worth some €307 million.
GI is a joint venture arrangement between the co-op and the plc, with ownership split 60%-40% respectively at present.
The deal will see the co-op acquire 100% of the processing business.
The deal – assuming it is ratified – opens up new possibilities for the co-op, and the board says it “won’t get stuck in a formula” when it comes to deciding on its future ventures with the GI operations in tow.
Speaking to Agriland on its future plans and possible acquisitions, Glanbia Co-op chairperson John Murphy said: “We’re really open – whether it’s in the plant space; whether it’s in the flavour space; whether it’s a food business that we can run alongside our own business. It could be a business in Ireland, in Europe or in the US. We’re really open-minded and broad-minded.”
Murphy explained that professional services firm KPMG was developing a strategy “in the background” to help the co-op determine a direction to move in.
“We’ll spend a little bit of time on this and we’ll see what works for Glanbia Ireland. We’d love to get a business that Glanbia Ireland can bring something to and add something to, and that’s probably along the plc model.”
“I have no doubt we have the capacity to do that, which we wouldn’t have had 20 years ago or 10 years ago,” according to Murphy.
Seán Molloy, chief agribusiness growth officer with Glanbia Ireland, noted that, at the moment, Glanbia Ireland “has a very strong strategy in its own right and a very strong plan in terms of adding value to the milk and grain that is taken in, and that will continue to be executed”.
Molloy added that GI’s “driving ambition is to find high-returning businesses” and that he, like Murphy, is “open-minded as to where they might be”.
Notwithstanding this, Murphy highlighted that the dairy business remains “the number one commitment”.
“We see growth there. We expect to grow 3% to 4% a year. We’re still going to be a growing business and hopefully we get our Belview Plant up and running in January. We will still be very committed to dairy and dairy food, but more focused on value than capacity,” Murphy explained.
The agreement between the co-op and plc includes provision for the co-op to set up an investment fund to provided financing for future acquisitions.
The money in this investment fund will be raised through the placement of 12 million of the co-op’s shares in the PLC, which would raise some €168 million. Until that fund is activated, those shares remain in the plc.
The deal, as it currently stands, will see the co-op’s shares in the plc reduce to 24% (from 32.4% at the moment) not including the shares that would be used to fund the investment mechanism.
If the placement of those 12 million shares does go ahead at some future date, that would reduce the co-op’s share in the plc to 20%.