Glanbia’s two parent entities, the PLC in control of its US-centred global nutrition business and the farmer co-op with 11,000 members across the eastern half of Ireland, confirmed on Friday that Glanbia Co-op had acquired the 40 per cent stake of Glanbia Ireland still in the hands of the PLC.

The transaction follows approval by the Competition and Consumer Protection Commission on Monday.

Glanbia Ireland covers all domestic activities, from purchasing the largest volumes of milk and grain in the country to processing and selling agricultural inputs and consumer products under well-known brands like Avonmore and Kilmeaden. With €2 billion in annual revenue, it is one of the very largest food businesses in Ireland – maybe the largest, but we can’t be sure because Larry Goodman’s ABP Food Group doesn’t publish accounts.

The co-op has now executed the €307 million buy-out of the PLC as voted by its members in December. It funded the acquisition primarily by raising €250 million in bonds in January, backed by a portion of its stake in Glanbia PLC. The co-op also sold €70 million worth of PLC shares at €12.25 per share at the time.

The price looked low at the time in light of the listed group’s recovery from pre-pandemic difficulties, and the heavy skewing of financing towards bond-raising was in response to co-op members’ concerns that they might not get the best value out of their PLC investment in a large share sale at the time. The price achieved was good in retrospect, with Glanbia PLC’s share price dropping to between €10 and €11 since the start of the war in Ukraine.

The net cost of the transaction to the co-op is lightened by a commitment from the PLC to contribute €8 million to transition costs and to renounce around €14 million in dividends it was due from Glanbia Ireland for 2021 and 2022 to date under the business’s existing shareholders’ agreement.

Glanbia Ireland announced this Friday that it would “create a Milk and Grain Price Provision of €43 million, which will be paid to suppliers over the next 12 months as the business transitions to a more flexible profit model”. The re-allocation of the co-op’s own dividends from domestic activity to price boosts is nothing new, but it is now also fuelled by the PLC’s foregone share of the bounty. This illustrates the business’s new priority under full farmer ownership: Return higher prices to co-op members for their farm produce.

Tuaglas – a potential new brand?

The future flexible profit model remains to be defined, but the main draw in favour of the transaction among co-op members contacted by The Currency at the time of the vote was to abolish the drag put on farmgate prices by Glanbia Ireland’s obligation to return a 3.2 per cent profit after tax, of which half had to be paid out in dividends. The PLC was in turn entitled to 40 per cent of this sum in proportion of its shareholding. Glanbia Ireland’s new full owners now have free rein to pay themselves higher prices for milk and grain rather than generate a taxable profit to pay themselves as dividends.

The other decision on their hands is to adopt a new name for the Irish business, as the Glanbia brand will remain the exclusive property of the PLC. A spokesperson for Glanbia Ireland said it would take until September before it announces a new name.

The company has, however, recently applied to the Intellectual Property Office of Ireland for the trademark Tuaglas, covering all its business lines. The name combines the Irish words for “green” and “countryside”. It also evokes ancient Irish tribal names such as “Tuatha Dé Danann”. 

Tuaglas would tick all the boxes for the marketing claims Ireland’s newest and largest agribusiness wants to present to customers under its new identity.