On the Street: Glanbia Sells Irish Dairy Unit

April 20/Radio Telefís Éireann -- Glanbia plc has conditionally agreed to sell its Irish dairy and agri-business to Glanbia Co-Operative Society for up to 343 million euros. The society owns 54.6% of the company.

The Irish dairy and agri-business is made up of three main business units: dairy ingredients Ireland, consumer products and agribusiness, as well as Glanbia estates, group business services and Irish joint ventures and associates. The deal will free up Glanbia plc to pursue its global cheese and nutritional ambitions, while the Co-op farmers get control of brands like Kilmeaden, Avonmore and Yoplait.

The deal is conditional on the approval of the members of the society as well as Glanbia plc shareholders. It is expected to be completed by June of this year. The company said it is also conditional on proceeds being no less than 299.6 million euros.

The complex transaction would be done via a placement of Glanbia shares held by the co-operative and a cash component. Following the placing, the co-operative will have a shareholding of about 20% in Glanbia. It then intends to transfer half of its remaining holding directly to members, resulting in a stake in Glanbia of about 10%.

Dairy Ingredients Ireland is the largest business of its kind in Ireland and has a milk pool of about 1.4 billion liters annually and processing it into butter, cheese, milk proteins and whey derivatives. It sells about 190,000 tons of dairy products and ingredients to customers in 50 countries and employs 476 people full time -- mostly at Ballyragget in Co Kilkenny and Virginia in Co Cavan.

Glanbia's consumer products business unit is made up of nutritional beverages, fresh dairy produce, cheese, soups and spreads sold to the Irish retail and food service sector. It has a workforce of 647 at 10 locations nationwide. Its brands include Avonmore, Premier, Kilmeaden and Snowcream.

Its agribusiness unit is engaged in feed milling, grain processing and the marketing and selling of a range of farm inputs. It employs 378 people on a full-time basis with another 100 part-time workers.

"In a changed global dairy market environment, the time and opportunity is now at hand to recognize and embrace the need for transformation," commented John Moloney, the group managing director of Glanbia.

"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," he added.

Liam Herlihy, chairman of the group and the society, said the last few years have demonstrated that world dairy markets and the Irish dairy sector are in time of profound change.

From the April 26, 2010, Prepared Foods E-dition