TIDMGLB
RNS Number : 8694R
Glanbia PLC
10 November 2021
Glanbia plc announces intention to sell its 40% holding in
Glanbia Ireland to Glanbia Co-op for EUR307 million
10 November 2021 , Glanbia plc ("Glanbia" or the "PLC") and
Glanbia Co-operative Society Limited ("Glanbia Co-op" or the
"Co-op") have today announced they have signed a non-binding
memorandum of understanding ("MOU") for the sale of the PLC's 40%
interest in Glanbia Ireland DAC ("Glanbia Ireland" or "GI") to
Glanbia Co-op (the "Proposed Transaction") for a purchase price of
EUR307 million.
Commenting today, Donard Gaynor Chairman of Glanbia plc
said:
"Glanbia Ireland has a successful heritage, and for many years
we have valued the partnership with Glanbia Co-op in creating a
strong business under our joint stewardship. This is the right time
for the Proposed Transaction. The Co-op is the right owner to
continue the strategic development of Glanbia Ireland for the
benefit of the Co-op's members, and the PLC can continue to
maximise the opportunities for its own business in the post-Covid
environment, with our focus on health, wellbeing and
nutrition."
Commenting today, Siobhan Talbot, Group Managing Director of
Glanbia plc said:
"Today's announcement represents the next stage of our
transformation journey following many years of successful
collaboration with Glanbia Co-op as joint venture partners in
Glanbia Ireland. 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. We expect to deploy
the capital received from the Proposed Transaction in investment to
drive further growth and to return capital to shareholders."
Strategic rationale and use of proceeds
The Proposed Transaction is consistent with the PLC's strategy
to focus on its two growth platforms, Glanbia Performance Nutrition
("GPN") and Glanbia Nutritionals ("GN"), as well as strategic joint
ventures. The PLC will increasingly focus on its global nutrition
strategy as a brand owner and provider of value added nutrition
solutions, serving high growth markets.
The proceeds from the proposed transaction will be primarily
invested in growth opportunities with up to 50% of the proceeds
being returned to shareholders via a share buyback.
Key terms
The Proposed Transaction is subject to the execution of binding
legal agreements between the PLC and the Co-op. Key terms from the
MOU are as follows:
-- Transaction consideration fixed at EUR307 million, expected
to be paid in cash, and not subject to any adjustment mechanisms
post completion. If the Proposed Transaction completes, GI is not
required to pay any
dividend to the PLC in respect of the 2021 financial year or otherwise, prior to Completion;
-- GI and the Co-op will change their respective names following
a transitional period post completion to names which do not include
"Glanbia";
-- The PLC will fund costs of EUR8 million to be incurred by GI,
related to pension obligations, separation and rebranding costs in
connection with the Proposed Transaction;
-- Post completion of the Proposed Transaction certain
corporate, business and IT services will continue to be provided by
the PLC to GI for a defined period;
-- GI will maintain certain commercial arrangements with the PLC
for the sale, purchase and agency of various products until the GI
name change has been implemented;
-- Within one year of completion of the Proposed Transaction,
all amounts owed by GI to the PLC in respect of an existing
shareholder loan of EUR28.8 million will be satisfied, (which
repayment is in addition to the consideration payable for the
Proposed Transaction);
-- On or before completion of the Proposed Transaction all PLC
representatives on the Boards of GI and the Co-op will retire;
and
-- Effective immediately the PLC Group Managing Director will
retire from her positon on the Board of the Co-op.
Process, approvals and timing
-- Subject to appropriate board approvals, it is expected that
binding legal agreements relating to the Proposed Transaction will
be executed by the parties by early 2022;
-- As the Proposed Transaction is between related parties, in
accordance with the Euronext Listing Rules and UK Listing Rules,
the binding legal agreements relating to the Proposed Transaction
will require the approval of the PLC's shareholders, excluding the
Society and its associates, at an extraordinary general meeting
("EGM");
-- Glanbia Co-op plans to hold a vote of its members ("SGM") to
approve the Proposed Transaction and related proposals; and
-- Subject to execution of legal contracts and receipt of all
necessary approvals, including any applicable regulatory approvals,
completion of the Proposed Transaction is expected to occur in the
first half of 2022.
Co-op financing
Glanbia has been informed by the Co-op that it intends to
finance up to 50% of the Proposed Transaction through the sale of
shares it owns in the capital of the PLC, with the balance to be
funded through borrowings.
Furthermore the Co-op intends to transfer via a spin out to its
members up to 12 million shares it owns in the capital of the PLC.
These proposals will be subject to a Co-op member vote at its
SGM.
Further updates
If and when final binding legal agreements relating to the
Proposed Transaction are signed, a Circular relating to the
Proposed Transaction will be published and sent to the shareholders
of the PLC. This document will contain the details of the key terms
agreed between the PLC and the Co-op and provide notice of the EGM.
Note final terms may vary to those outlined in this
announcement.
Glanbia Ireland background
Glanbia Ireland is a joint venture owned 60% by Glanbia Co-op
and 40% by the PLC. GI is the largest milk processor and grain
buyer in Ireland, producing a range of value-added dairy
ingredients and consumer products as well as selling farm inputs.
GI operates 11 processing plants, 52 agri retail branches and has
over 2,000 employees.
In the 2020 financial year on a 100% basis, GI generated
EUR1,906.2 million in revenue and a profit after tax of
EUR60.0m.
GI contributed EUR23.9 million to the share of results of
Glanbia equity accounted investees in the 2020 financial year,
equating to approximately 8.5 cent of PLC adjusted earnings per
share.
Inside Information
This announcement contains inside information. The person
responsible for arranging for the release of this announcement on
behalf of Glanbia plc is Michael Horan, Company Secretary. The time
and date of this announcement is, at 7am GMT, 10 November 2021.
Advisers
Advisers to Glanbia PLC : Financial adviser and Sponsor: Credit
Suisse International and Legal adviser: Arthur Cox
Advisers to the Co-op: Financial adviser: KPMG and Legal
adviser: Matheson
ENDS
For further information contact
Glanbia plc +353 56 777 2200
Liam Hennigan, Group Director of Strategic Planning &
Investor Relations:+353 (0)86 046 8375
Martha Kavanagh, Director of Corporate Affairs: +353 87 646
2006
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END
DISUKRORABUARUA
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