A number of Glanbia Co-op shareholders have confirmed to Agriland that they have resigned their positions from advisory committees/council in advance of a special general meeting (SGM) due to take place on Friday, December 17.
That SGM will, among other things, seal the fate of the proposed €307 million purchase by Glanbia Co-op of Glanbia plc’s 40% stake in (GI).
Three members of regional advisory committees, one of whom is also a member of council, have tendered their resignations due to concerns over various components of the proposed acquisition.
All three will vote against the proposal at the upcoming SGM and want other farmers to consider their votes carefully.
The co-op intends to finance up to 50% of the purchase through the sale of plc shares, with the balance to be funded through borrowings. Additionally, the co-op will transfer, via a spin out to its members, up to 12 million plc shares. These proposals will also be subject to a vote at the SGM.
If approved, the co-op will pay €307 million to become sole owner of Glanbia Ireland, and become a 100% farmer-run co-op. The name of the co-op will also change under the new restructure.
But, concerns over governance, a lack of adequate time for debate and discussion, the virtual nature of the SGM, among others, have led to some shareholders voting with their feet as they take a strong stance against the plan.
Glanbia governance concerns
Last week, dairy farmer, Anthony Murphy, stepped away from his role on the West Waterford Regional Advisory Committee and Glanbia Council – he has been a member of both for about seven and five years, consecutively.
“I have concerns, that is why I stepped down,” he said.
The crux of those concerns are around governance issues, he told Agriland.
“Setting up the investment fund whereby all shareholders invest – proposed €168 million – but only 10% return going to all shareholders is a transfer of wealth from one cohort of shareholders to another.
“I have an issue with the fact that the co-op CEO – who is not a shareholder in the co-op [you must be a farmer to be a co-op shareholder] – has a very large shareholding in the plc, and he is overseeing the €307 million deal. That would be a conflict of interest as far as I am concerned,” he added.
Several thousand shareholders – ‘A3’ shareholders – have no vote at this SGM, as per previously agreed co-op rules. This, too, does not sit well with him, he said.
“I would very much be in favour of the co-op buying back the plc’s 40% stake in GI, even if it seems a bit dear, but I am totally opposed to the investment fund part.
“I think a revised proposal sometime next year when, hopefully, crowds could attend meetings in person would be preferable to allay fears,” he said.
Confirming that he will be voting no this Friday, he recalled how a proposed restructuring deal back in 2010 was rejected, and saw a new and better proposal come before shareholders.
“A better set of proposals came two years later, were duly adopted and created possibilities to fund the plant in Belview and within farmers’ gates,” he said.
‘I am not backing the deal’
Two members of the North Wexford / East Wicklow Regional Advisory Committee have also tendered their resignations.
This is the same committee on which Glanbia Co-op chair, John Murphy, also sits.
Padraig Doyle, a dairy farmer from Gorey, was elected to the committee two years ago.
He told Agriland that, given the size and the complexity of this proposal, and the lack of communication and dialogue among the advisory, he felt that he had no choice but to tender his resignation, which he did yesterday (Sunday, December 12).
“I want to be absolutely clear, I am pro Glanbia. I do all my trading there and I have no gripe with it, but when I am not allowed to represent the views of the farmers that I am there to represent, there’s no point in me being there.”
He said that the North Wexford / East Wicklow Regional Advisory Committee had been afforded just one two-hour presentation on the proposal, but much of that time was taken up with Glanbia management making that presentation. The 20-or-so people on the advisory committee did not have sufficient time to ask questions, he said.
“My mandate was very clear – the farmers I represent wanted a voice brought to the table – I promised them that voice but I am not allowed to articulate their views.”
Several important questions, he said, had not been answered with adequate detail.
“I asked the chair and the vice-chair of the advisory if they could point out to me where the milk price will come from in future; at the moment, we have to make a 3.2% margin after tax, I wanted know what that figure will be under the new co-op structure; and I wanted them to give me reassurance on how the investment fund will be used,” he said.
“In terms of the 3.2% margin, their answer is there will be ‘strong financial discipline’, but we have to be able to put a figure on that.”
Padraig Doyle said he will exercise his vote on Friday but it will be a no.
“I want to make it clear to the farmers I represent that I have tried to represent them but because I haven’t been able to get the answers, I have had to take this approach. And I am not backing the deal.”
‘This is a monumental proposal’
Vincent Gahan, a dairy farmer from near Gorey, has sat on the North Wexford / East Wicklow Regional Advisory Committee for almost 15 years.
His verbal resignation was accepted last night (Sunday, December 12) and he issued an email today.
From the outset, he stated his support for Glanbia but he will be voting no at this Friday’s SGM on a proposal that he feels is being rushed through.
Among others, he cites concerns over the new co-op structure and the valuation of the 40% GI share, which he feels is too much.
“I always have been a Glanbia supporter, I am fully committed to it. Every euro that comes into this farm is through Glanbia, whether for grain, milk, dividend; I am passionate about the co-op, but what is happening is just unreal.”
“This is a monumental proposal and it is not just about the 40% purchase of GI by the co-op. There will be big changes to the governance of the co-op, including the removal of the governance of the plc, which I have always liked. The plc made sure that things were always done correctly and by the book and that the best decisions are made.
But, his main bone of contention is that there hasn’t been enough time for it to be discussed.
“We are talking about selling up to half of the plc shareholding, releasing about €630 million, into the co-op’s hands to be reinvested. This is too big a decision to be rushed through, and farmers are not fully aware.”
He said he understands that Covid-19 had posed challenges to having face-to-face meetings but Zoom meetings do not suffice.
He said he knows that there are farmers who simply don’t understand the full extent and detail of what they are being asked to vote on this Friday.
“Absolutely, there are [farmers who don’t understand]. And there is anger among farmers too; you go on a Zoom call and you are on mute, then you ask a question, and then you are on mute again.
“The way this is being done is not the way of a co-op. A co-op is about farmers having a voice and doing things for farmers – this is not how a co-op acts.”
He said the implications of Friday’s vote – should it pass – are not well known.
The deadline for registration to vote in the SGM is tomorrow (Tuesday, December 14). Voting will take place on Friday 17 December at 2:00p.m. The meeting will take place online in a virtual format permitted under current regulations and approved by Irish Co-operative Organisation Society (ICOS).