One of Ireland's biggest companies is selling a chunk of the business behind Avonmore milk
Glanbia plans to sell a 60% stake in its dairy division for €112m.
FOOD PRODUCER GLANBIA is selling a chunk of its dairy division to focus on its growing fitness and nutrition businesses.
The Kilkenny-based company announced today that it plans to sell a 60% stake in Dairy Ireland to its largest shareholder, Glanbia Co-op Society.
The deal, worth €112 million, would see the dairy division spun off into a new company called Glanbia Ireland.
The new entity will become the owner of well-known consumer and agri brands such as Avonmore milk and Gain Feeds.
The multimillion-euro transaction is subject to approval from shareholders of both Glanbia and the co-op and is expected to be completed by mid-2017.
A research note from Davy stockbrokers said the move indicates “another step in the refocusing of the group towards its two growth engines”, Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN).
GPN manufactures products like protein smoothies and energy drinks, while GN makes health supplements and infant nutrition products as well as cheddar cheese for the US market.
“While consolidating the management of the Irish assets into a more aligned structure, (the deal) would also offer the potential to release capital to support (Glanbia’s) international ambitions,” Davy analysts said.
‘Makes strategic sense’
Glanbia’s group managing director Siobhán Talbot said the creation of Glanbia Ireland “makes strategic sense for the shareholders of both Glanbia Co-op and Glanbia plc”.
“It brings together in a single structure the ownership, operations and objectives of Glanbia’s Irish dairy and agribusinesses,” she said.
“With €1.5 billion of annual revenue and a 2.4 billion litre milk pool, it will be a large scale, efficient business with a high-quality supply chain and the strength and diversity to face the future with confidence.”
She said Glanbia will “continue to focus on its global nutrition strategy” through GPN and GN.
Glanbia group MD Siobhán Talbot
Glanbia also announced today that it saw its seventh year of double-digit growth in 2016.
It reported an operating profit of more than €247 million for the year, up nearly 15% on the previous 12-month period.
Its GPN division saw earnings before deductions increase by 20% to €163 million.
Meanwhile, Glanbia Nutritionals also performed well and saw its earnings increase by 4.5% compared to the previous year to €111.8 million.
The company’s board recommended a dividend of 7.94 cent per share, bringing the total dividend for the year to 13.31 cent per share, returning almost €40 million to its shareholders.
