Glanbia Plc could be paid up to EUR343 million (US$461 million) for its Irish dairy and agri-businesses by Glanbia Co-Op in a proposed buy-out.

 

The co-op currently owns 54.6% of the company but that will fall to 10% if the deal goes ahead.

 

It is intended that farmers individually will hold about 25% of the total equity in the group following the sale, giving the co-op and its members a 35% stake in Glanbia Plc.

 

Under the proposals shareholders will gain roughly EUR88 million (US$118 million) from the transfer of shares.

 

The co-op, which says it will change its name to reflect the break with Glanbia Plc, will pay for the takeover by placing 102 million of public shares on the market.

 

Shares in Glanbia rose almost 8% in Dublin yesterday following the announcement and were trading at EUR3.29 (US$4.42) per share.

 

Two crucial votes by the co-op members are required to get the deal through.

 

They will require 75% approval by society members and 75% approval of milk suppliers at meetings set for May 10 and 24. Shareholder approval at an EGM will also be required and the plan is to have the sale completed by mid-June.

 

Both sides have promoted the move as in the best interests of all, but the co-op knows it will have to put a convincing case to farmers to get them to end their control over Glanbia Plc.

 

Lam Herlihy, the co-op chairman, said the move reflects the major changes taking place in Irish farming.

 

"Changes are taking place and opportunities are emerging for the first time in 25 years for Irish dairy farmers to expand their dairy output. Gaining ownership and control of key strategic Irish assets puts members in an excellent position to capitalise on these changes," he said.

 

The sale will have a positive impact on Glanbia's debt and will have little impact on its balance sheet, which is virtually debt free.

 

The Irish dairy and agribusiness is made up of three main business units – dairy ingredients, consumer products and agribusiness, and a number of other offshoots. The division employs 1,900 people, has sales of EUR1 billion (US$1.34 billion) and makes profits of about EUR70 million (US$94 million) on its current output.