Glanbia will embark on a new joint venture in Ireland with Glanbia Co-op that will see three of its business areas spun off into a separate company.
The new entity – called Glanbia Ireland – will combine Glanbia’s activity in cheese and dairy ingredients, consumer foods like the Avonmore brand of milk, and its agribusiness, which supplies and processes grain for the Irish agricultural sector.
The joint venture will be 40% owned by Glanbia and 60% owned by Glanbia Co-op, which will pay €112 million on completion to acquire the stake in Glanbia’s existing Dairy Ireland business unit.
Glanbia Ireland, which will be spun off to form a separate business, will be headed by current Glanbia Ingredients Ireland CEO Jim Bergin.
Glanbia group managing director Siobhan Talbot said: “The creation of Glanbia Ireland makes strategic sense for the shareholders of both Glanbia Co-op and Glanbia. It brings together in a single structure the ownership, operations and objectives of Glanbia’s Irish dairy and agri-businesses. 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.
“Glanbia will continue to focus on its global nutrition strategy through the platforms of Glanbia Performance Nutrition (GPN), Glanbia Nutritionals (GN) and strategic joint ventures for the benefit of all shareholders.”
The move will build on the partnership that already exists between Glanbia Co-op and Glanbia, following the creation of Glanbia Ingredients Ireland in 2012.
The Irish company said that it would ‘maximise the opportunities’ provided by continued growth in its milk supply, and drive value across the group’s activities. Glanbia Ireland will invest between €250 million and €300 million by 2020 to increase its overall capacity and help unlock further growth.
The overall value of the new joint venture is €186 million.
Between 2014 and 2016, Dairy Ireland – the current business unit that combines Glanbia’s consumer food and agribusiness operations – had average three-year working capital of approximately €92.5 million. Glanbia has also published its full-year results, which show that group-wide revenue grew 0.8% last year to €3.7 billion.
The transaction is expected to be completed by the middle of the year.
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