The proposed move by Glanbia Co-op to take full ownership of Glanbia Ireland (GI) “will require careful scrutiny” before co-op members back the transaction, according to the Irish Farmers’ Association (IFA).
Tim Cullinan, the association’s president, said that the announcement this morning (Wednesday, November 10) that the co-op will take full control of GI is “a significant step for the business”.
“This is a complex financial arrangement that will require careful scrutiny before members vote on the proposals,” Cullinan said.
“I would ask that Glanbia provide every opportunity for this plan to be discussed ahead of the special general meeting [SGM] that will have to take place.”
The IFA says that it will seek a meeting with Glanbia “as soon as possible” to discuss the proposals.
“It’s important that suppliers see benefits from this deal if it goes ahead,” the IFA president stressed.
He highlighted that Glanbia has a three billion litre milk pool and takes 270,000t of grain each year.
“It’s a major processor and buyer of what farmers produce so they should be a market leader in price.”
His views were echoed by IFA dairy chairperson Stephen Arthur, who noted comments from Glanbia Co-op chairperson John Murphy that “our ambition is to pay the best possible price for milk”.
“Whatever new structure may emerge, it has to return a leading milk price to the farmers. The business must seek to extract the maximum value from the market for the quality product that we sell to them,” Arthur said.
Mark Browne, the IFA’s grain chairperson, said that grain farmers would “expect any new arrangement, if it goes ahead, to pay a leading milk price for the quality grain supplied”.
Both Glanbia Co-op and Glanbia plc announced details of the proposed transaction this morning.
The two parties signed a non-binding agreement which will see the co-op take full ownership of GI.
Currently, GI operates as a strategic joint venture, 60% owned by Glanbia Co-op and 40% owned by Glanbia plc.
Subject to the successful conclusion of contract negotiations and the relevant shareholder approvals within both the plc and the co-op, the latter proposes to pay €307 million to acquire the plc’s 40% shareholding in GI.