Glanbia to Sell 60% of Dairy Ireland
Glanbia plc, the global nutrition group, has agreed to sell 60% of its Dairy Ireland segment to Glanbia Co-op. Dairy Ireland is currently 100% owned by Glanbia plc and is comprised of two business units, Glanbia Consumer Foods Ireland and Glanbia Agribusiness.
In 2016, Dairy Ireland generated revenue of €616.2 million, earnings before interest, tax and amortisation (EBITA) of €30.7 million and an EBITA margin of 5.0%. In return for its 60% stake in Dairy Ireland, Glanbia plc will receive €112 million together with the equivalent to 100% of the amount of the working capital in Dairy Ireland at completion. The average three year working capital in Dairy Ireland over 2014, 2015 and 2016 was approximately€92.5 million.
Siobhán Talbot, group managing director of Glanbia.
Siobhan Talbot, group managing director of Glanbia, comments: “This strategic initiative remains on track to be completed by mid-year. Once completed it is planned to integrate Dairy Ireland with our associate, Glanbia Ingredients Ireland DAC to form ‘Glanbia Ireland’, which will be a leading Irish food business. This will bring together Glanbia Group’s Irish dairy and agri-businesses under single ownership and will enable Glanbia to continue to focus on its two growth platforms of Glanbia Performance Nutrition and Glanbia Nutritionals.”
Glanbia Ingredients Ireland DAC (GIID) was established in 2012 as a dairy processing joint venture which is owned 40% by Glanbia plc and 60% by Glanbia Co-op. After completion of the proposed transaction GIID will be owned 40% by Glanbia plc and 60% by Glanbia Co-op and will be known as Glanbia Ireland. While this is the same percentage shareholdings that each company currently holds in GIID, it represents an expansion of the existing joint venture since it will encompass the existing businesses of GIID and Dairy Ireland, including Glanbia Consumer Foods Ireland and Glanbia Agribusiness.
The deal will create an integrated Irish-based business of scale which is the largest dairy processor in Ireland. It is envisaged that GIID will embark on a €250 million to €300 million strategic capital investment programme in the period 2017 to 2020. This investment programme is intended to increase capacity to support the stated growth ambitions of the GIID milk suppliers and optimise value-adding opportunities. The financing of the investment will substantially be sourced from dedicated bank facilities in GIID. The new arrangement will reduce Glanbia plc’s working capital funding requirements.
