Glanbia Milk Link unite to exploit cheese sector
an effort to exploit the UK cheese market. The new formation will
be 75 per cent owned by Milk Link and 25 per cent owned by the
Glanbia.
Cheese Company Holding (CCH), the name given to the joint venture company, once formed will be the second largest cheese producer in the UK. It will be established with a capital subscription of £16.9 million by Milk Link and an initial £5.6 million (€8.3 million) from Glanbia.
One hundred per cent of Glanbia Foods will be bought by the new company for a sum of £94.3 million (€140.1 million). From this £59.3 million will be paid in cash (€8.3 million) and the rest will be made available through an interest-bearing loan note of £35 million (€59.3 million) that will commence in 2008.
Further financial support will be given to the new venture. Glanbia will contribute a total £8.8 million (€13.1 million) in the form of a share premium spread over four years while Milk Link will contribute an annual amount of £2.5 million in connection with the exclusive milk supply contract with Glanbia Foods, reflecting the synergies it expects to generate.
Overall this provides Glanbia with a net consideration of £79.9 million for its 75 per cent stake in Glanbia Foods.
The new company will employ in the region of 1000 people and will be the second largest cheese producer in the UK market. It will operate four cheese processing facilities and a consumer packing facility.
The companies says that their experiences and strengths compliment each other. Glanbia has developed strong relationships with major retailers while Milk Link claims to be experienced in developing a wide range of dairy products. Both believe that the move will leave both companies in a good position for the future.
Glanbia's managing director, John Noloney commented: "This transaction will facilitate our strategic focus on high growth areas such as consumer products, dairy ingredients and in particular the nutrition market. At the same time, it allows us to maintain both access to the UK market for our Irish cheese production and a continuous supply of products to serve our growing nutritional, ingredients and mozzerella business."
Barry Nicholls, Milk Link's chief executive said:
"Moving into the cheese production complements our substantial, existing liquid milk and ingredients businesses, as well as our fresh dairy products business through our strategic alliance with Arla Foods. It also allows us to build upon our increasingly strong customer relationships in the retail and food services sectors."
"We are confident, as a result of this transaction, Glanbia will retain a significant stake in a stronger, more integrated business which will compete successfully in the UK cheese market," Glanbia's managing director concluded.
