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RNS Number : 8992U
Glanbia PLC
08 December 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Glanbia plc announces it has signed binding legal agreements to
dispose of its 40% holding in Glanbia Ireland to Glanbia Co-op for
EUR307 million
8 December 2021 , Glanbia plc ("Glanbia" or the "PLC"), the
global nutrition group, and Glanbia Co-operative Society Limited
("Glanbia Co-op" or the "Co-op") have signed binding legal
agreements, subject to certain approvals and conditions, for the
disposal 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.
Update on the Proposed Transaction
On 10 November 2021, Glanbia announced that it had agreed a
non-binding memorandum of understanding ("MOU") for the disposal of
the PLC's 40% interest in Glanbia Ireland to Glanbia Co-op. The PLC
has now entered into binding legal agreements with the Co-op in
connection with the sale.
Strategic rationale for the Proposed Transaction
The board of the PLC believes the Proposed Transaction will
continue the alignment of Glanbia's portfolio through the strategic
focus on global nutrition via its platforms, Glanbia Performance
Nutrition ("GPN") and Glanbia Nutritionals ("GN"), and through
strategic joint ventures.
As a brand owner and provider of value added nutrition solutions
serving high growth markets, the PLC will increasingly focus on its
global nutrition strategy.
The Proposed Transaction will also allow the PLC to deploy the
capital received from the Proposed Transaction in investment to
drive further growth and to return capital to shareholders.
Glanbia Ireland
Glanbia Ireland is a joint venture owned 60% by Glanbia Co-op
and 40% by the PLC. Glanbia Ireland 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.
Glanbia Ireland operates 11 processing plants, 52 agri retail
branches and has over 2,000 employees.
As of the half year ended 3 July 2021, the value of the gross
assets the subject of the transaction was EUR225.2 million [1] and
the profit before tax attributable to the PLC's interest in Glanbia
Ireland for the full year ended 2 January 2021 ("FY 20") was
EUR23.9m [2] . Glanbia Ireland contributed 8.5 cent to Glanbia's
adjusted earnings per share in FY 20.
Proposed Transaction consideration
The consideration payable to the PLC in respect of the Proposed
Transaction is EUR307 million, to be paid in cash on completion.
The consideration is not subject to any adjustment mechanisms post
completion of the Proposed Transaction. The Co-op has informed the
PLC that it is in the position, if required, to fund the
consideration through a combination of existing cash resources and
debt facilities.
Use of proceeds and financial effects of the Proposed
Transaction
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.
As completion of the Proposed Transaction is currently expected
to take place in the first half of 2022, the disposal of the PLC's
interest in Glanbia Ireland would therefore be reflected in the
Group's accounts for the financial year ending 31 December 2022 and
would be expected to be dilutive to the adjusted earnings per share
of Glanbia on a full year reported basis in 2022.
Conditions to Completion
The Co-op is a substantial shareholder in Glanbia for the
purpose of the listing rules of Euronext Dublin and the Financial
Conduct Authority (the "Listing Rules"). The Proposed Transaction
is classified as a related party transaction under the Listing
Rules and is subject to, and conditional upon, the approval of the
shareholders of Glanbia, other than the Co-op or persons connected
with the Co-op (the "Independent Shareholders"). The approval of
Independent Shareholders of the Proposed Transaction will be sought
at an extraordinary general meeting of Glanbia (the "EGM"), details
of which will be included in a circular which will be published and
sent to shareholders early in 2022 (the "Circular").
The Circular will contain a notice convening an EGM, with date,
time and location, and a shareholder proxy voting form. The purpose
of the EGM will be for the Independent Shareholders to consider
and, if thought fit, approve, as an ordinary resolution, the
Proposed Transaction. Glanbia will make a further notification upon
the publication of the Circular. The Proposed Transaction also
constitutes a Class 2 transaction under the Listing Rules.
The Proposed Transaction is also subject to certain other
conditions, which are summarised below:
-- Approval of the Proposed Transaction by the Co-op's members.
This approval will be sought at a Special General Meeting of the
Co-op scheduled for 17 December 2021;
-- Any necessary regulatory approvals; and
-- No material adverse change, subject to specific exclusions,
having occurred to the business of Glanbia Ireland between the date
of the binding legal agreements and completion of the Proposed
Transaction.
Other key terms of the Proposed Transaction are as follows:
-- GIanbia Ireland and the Co-op will change their respective
names following a transitional period post completion of the
Proposed Transaction to names which do not include "Glanbia";
-- PLC will fund costs of EUR8 million to be incurred by GIanbia
Ireland, related to pension obligations and 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 and the Co-op for a defined period;
-- GI will maintain certain commercial arrangements with the PLC
for the sale, purchase and distribution of various products until
the GI name change has been implemented;
-- PLC will be substituted by Glanbia Ireland as the principal
employer of the Glanbia Pension Scheme and the Glanbia Defined
Contribution Pension Scheme (together, the "Current Schemes"). PLC
will establish new mirror pension schemes for PLC future service.
The accrued assets and liabilities attributable to PLC members in
the Current Schemes will, subject to the required consents, also be
transferred to the new schemes;
-- Within one year of completion of the Proposed Transaction,
all amounts owed by GIanbia Ireland to the PLC Group in respect of
an existing shareholder loan of EUR28.8 million will be satisfied
(this repayment is in addition to the consideration payable for the
Proposed Transaction); and
-- On or before completion of the Proposed Transaction all PLC
representatives on the board of directors of any GIanbia Ireland
group company will resign.
Further details on the terms and conditions of the Proposed
Transaction will be included in the Circular.
Inside information
This announcement contains inside information as set out in the
paragraph titled " Update on the Proposed Transaction" . 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, 8 December 2021.
Advisers
Advisers to Glanbia PLC: Financial adviser and Sponsor: Credit
Suisse International and Legal adviser: Arthur Cox LLP
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
[1] Being the carrying value of the PLC's interest in Glanbia
Ireland
[2] Being the PLC's share of Glanbia Ireland's profits after tax
but before exceptional items, accounted for within "Share of
results of equity accounted investees" and equivalent to EUR23.0m
after tax and exceptional items
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END
DISFFFLLFRLDIIL
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