Glanbia had agreed in April to sell its Irish dairy business to its majority shareholder Glanbia Co-operative Society for about €343m.
However, the deal has now been shelved because not enough farmer members of the co-op, which holds a 54 per cent share in Glanbia Plc, voted for it earlier this week.
Although 73 per cent of members voted in favour of the acquisition, the Glanbia Co-operative Society failed to secure the 75 per cent majority support from its members required for the acquisition to proceed to the next stage.
A total of 2970 members voted for the deal and 1097 against in a ‘one member, one vote’ ballot. Only 49 per cent of those eligible to vote did so – a relatively low turnout figure that may largely be explained by the fact that voting by proxy was not permitted.
Despite the narrow margin of the vote, the parties behind the deal have so far not suggested that plans should be resurrected, or that the voting rules be changed.
Glanbia Co-operative Society chairman, Liam Herlihy, expressed his disappointment that insufficient support was garnered but said “we fully accept and respect the result.”
Meanwhile, John Moloney, the Plc’s managing director, said the vote is a “big disappointment.” He added that: “It is important for us now to take some time to reflect on this outcome.”
However, some commentators have suggested that a proposal to sell the Irish dairy business could return to the table, especially given how close the final result was.
In a note to investors, Davy stockbrokers said: “The 73 per cent vote in favour would in most circumstances be considered an overwhelming expression of its acceptance and approval of its terms. We do not believe that this can or will be ignored (otherwise it is tyranny by the minority).
“The willingness of such a large body of shareholders in Glanbia co-op to favour the proposal suggests to us that the issue will re-emerge and will, perhaps by some other means, be achieved.”
The benefits of a disposal of the Irish dairy business could be significant for Glanbia Plc. Not only would a sale deliver a significant overnight improvement in margins but it would also give Glanbia the financial freedom to go after growth opportunities in the nutrition sector.
When the disposal was proposed, Joe Gill, an analyst from Bloxham Stockbrokers, told DairyReporter.com that it makes “perfect logical sense” for the Plc.
Following news of the ‘no’ vote, Gill said it was a disappointment but that there were plenty of positives at the Plc that should not be forgotten. He said the interim management statement released this week was encouraging. To read more about the financial results, please click here.