Glanbia Reach Agreement on New Dairy Processing Joint Venture
This agreement follows the announced signing of a memorandum of understanding between the two parties on 29 August and is a further step towards the completion of the transaction. Details of the required shareholder approval processes are set out below.
23 Oct 2012 --- Glanbia plc has announced that the global nutritional solutions and cheese group, is pleased to announce that, subject to relevant shareholder approval, the Group has signed contracts with its majority shareholder, Glanbia Co-operative Society Limited, to enter into a 40%: 60% joint venture in respect of Dairy Ingredients Ireland. This agreement follows the announced signing of a memorandum of understanding between the two parties on 29 August and is a further step towards the completion of the transaction. Details of the required shareholder approval processes are set out below.
Commenting, John Moloney, Group Managing Director of Glanbia plc said: "At this point in our development we face clear strategic choices as we approach a post quota era. The proposed new Joint Venture is based on an existing, well invested and profitable international dairy ingredients business. This creates a strong platform from which to grow milk volumes and to capture the benefits arising from increased milk production and processing, post the abolition of milk quotas. The Joint Venture will ensure a continuation of strong and complementary links between the plc and the Society within a structure that better accommodates the strategic interests of Society members. It also enables Glanbia to continue its successful international growth strategy and to maximise value for all shareholders."
The Joint Venture transaction incorporates the business and assets of Dairy Ingredients Ireland ("DII"), a business unit of the Dairy Ireland division of Glanbia, including its 45% share of the Corman Miloko Ireland JV and its 23% shareholding in the Irish Dairy Board. Under the proposed transaction, the new joint venture, to be known as Glanbia Ingredients Ireland ("GII") will be 60% owned by the Society and 40% owned by Glanbia. The business, net fixed assets, working capital and liabilities of DII will be transferred to the joint venture, which will also assume the relevant pension obligations of DII.
The existing DII business is the largest dairy ingredients processor in Ireland, assembling a milk pool of 1.6 billion litres and processing it into c.180,000 tonnes of dairy ingredients largely for export to over 50 countries worldwide. In 2011, DII generated revenue of €738 million, operating profit of €33 million and EBITDA of €44 million.
