Glanbia’s co-operative shareholders have today voted against backing a €343 million bid for Glanbia PLC’s Irish milk operations.
A total of 73 per cent of members voted for the motion at the meeting of Glanbia co-op members in Piltown, Co Kilkenny, but a 75 per cent majority had been required under co-op rules.
Of 4,060 farmer shareholders who attended the special general meeting held at Kildalton College, Co Kilkenny, 2,970 voted in favour of acquiring the Irish dairy and agri-businesses, while 1,097 voted against. The secret ballot was conducted by the Irish Co-operative Organisation Society.
Some 8,000 co-op members were entitled to vote in the ballot, and no proxy votes were allowed. Co-op members were asked to support a deal that would have seen the co-op take over Glanbia’s Irish dairy business.
Commenting John Moloney, group managing director of Glanbia PLC said: "We believed this was a compelling and strategic opportunity for both the Society and the PLC. . . . and of course, it is a big disappointment that it did not receive the necessary endorsement from the members of the society to take the deal forward.
"While it is important for us now to take some time to reflect on this outcome, we remain very confident of the underlying strength of the group’s businesses."
Glanbia Co-operative Society chairman Liam Herlihy also expressed disappointment at the outcome of the vote but said he fully respected the decision of members.
“I am deeply disappointed at this narrow defeat. Achieving the required 75 per cent vote was never going to be easy. It is clear that a significant number of farmers supported full ownership of the Dairy Ireland businesses, but the level of support was just not enough."
The move sought to reverse the trend of the last three decades in the dairy industry when co-operative societies set up PLCs to run their national and international business for them.
The vote by co-op members will see them seek to gain farmer control over the Irish dairy operations and drop their shareholding in the PLC from nearly 55 per cent to a low of 10 per cent. This will require a 75 per cent majority.
While the co-operative and PLC have been pushing for agreement at more than 50 meetings with shareholders over the last number of weeks, quite a sizable rump of shareholders – especially grain growers – are less than happy with the deal, believing dairy producers will have too much influence.
While the Irish Creamery Milk Suppliers has come out forcibly in favour of the farmer buyout, the Irish Farmers’ Association (IFA) has been muted in its support. Its president, John Bryan, has gone no further than saying he agrees with the principle of farmer control.
The central executive of the Irish Fresh Milk Suppliers, which represents nearly 1,100 of Glanbia’s milk suppliers, has come out in support of the deal, which will also have to be ratified by a 75 per cent majority by the dairy suppliers.
Nearly half of the co-operative shareholders are milk producers appeared to be in favour of the deal, but grain growers and non-milk suppliers do not appear to have the same appetite for the venture.
The chairman of the co-operative society, Liam Herlihy, welcomed the support of the farm organisations.
The IFA had raised the issue of the projected €70 million annual earnings projected in the deal and on future liabilities, especially relating to the pension liabilities facing the society.
Mr Herlihy said shareholders could be assured the projected earnings were achievable and sustainable and pension liabilities had been fully provided for.
He added the society had reaffirmed its full commitment to grain and grain growers as an integral part of the business and had given assurances ensuring the most effective representative structures for growers in the new structure.