Glanbia has announced plans to sell its remaining 40 per cent stake in Glanbia Ireland, the State's largest dairy business, responsible for brands such as Avonmore, Kilmeaden and Premier.
The move, if it goes ahead, will effectively end the Kilkenny-based food company’s involvement in dairy processing in Ireland, the core business originally, and cement its focus on food ingredients and sports nutrition.
Glanbia plans to sell its interest in Glanbia Ireland to Glanbia Co-op, which is owned by farmers who supply it, for €307 million. There had been reports that it could be sold for as much as €500 million.
The sale will allow Glanbia to focus on its two growth platforms – Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN) – which drive the bulk of its annual revenue: €3.8 billion last year.
Some 50 per cent of the proceeds will be returned to shareholders via a share buyback with the remainder used to fund further growth and acquisitions.
Glanbia Co-op, which owns 60 per cent of the dairy processor, will part fund the transaction through the placement of plc shares.
Managing director Siobhan Talbot said "the time was right to sell" and the deal marked the culmination of a process that began with the spinning out of Glanbia's processing business into a joint venture with the co-op in 2017.
Strong business
“From the co-op perspective, Glanbia Ireland is a strong business and really well invested ... from our perspective it allows further focus on the growth strategy [which is centred around nutrition and ingredients],” she said, noting the announcement represents the next stage of the company’s transformation. “If approved, the proposed transaction will continue the alignment of our portfolio to our strategy, which is focused on driving growth through our market leading positions as a brand owner and ingredient solutions provider, playing into strong underlying consumer health and wellness trends,” Ms Talbot said.
As well as returning capital to investors, she said the company would deploy the capital received from the transaction in investment to drive further growth.
Glanbia Ireland is the State’s largest dairy business, operating 11 processing plants and employing more than 2,000 staff. It generated €1.9 billion in revenue in 2020.
Glanbia Co-op is proposing to transfer, via a share spin out, 12 million Glanbia plc shares to all existing members. Based on Glanbia plc’s closing share price of €13.98 on November 9th, this would be worth approximately €168 million, or €11,028 for a member with an average shareholding.
This follows the spin out of a total of 36.5 million Glanbia plc shares worth more than €510 million by the co-op in 2013, 2015 and 2017. Glanbia Co-op is the largest individual shareholder in Glanbia plc, holding 93.3 million shares, or 32.4 per cent of the issued share capital of the company.
Separately, Glanbia said group revenue over the first nine months of 2021 rose almost 10 per cent year-on-year as the company experienced good demand across its businesses.
Revenue growth
GPN saw revenue growth of 18 per cent, with like-for-like branded revenue growth of 25.2 per cent on strong performance nutrition consumption trends across Glanbia’s American and international regions.
GN nutritional solutions saw revenue rise 15 per cent and volume growth of almost 16 per cent as consumers’ demand for healthier snacks and micro-nutrients remained strong.
During the period, the company completed the $52 million (€45 million) acquisition of US food ingredient solutions business, PacMoore Process Technologies.
The end of the third quarter saw net debt of €589 million, a fall of €39.1 million year-on-year.
Glanbia said it expects the full-year adjusted earnings per share to be at the upper end of the previously guided range of 17 per cent to 22 per cent growth on a constant currency basis.
“The group continues to navigate the various impacts of the Covid-19 pandemic well, delivering strong volume growth in the third quarter with our plants operating to plan and price increases implemented in response to cost inflation,” Ms Talbot said. “We are focused on progressing our ESG agenda, working towards emissions reductions and implementing our diversity and inclusion strategy.
“As we exit 2021 we will maintain our focus on driving top line growth and are planning further pricing actions for early in 2022 in response to the continued inflationary environment.”
