Glanbia

freedominacup

Told ye.

http://www.irishtimes.com/newspaper/breaking/2012/0829/breaking8.html

http://www.glanbia.com/news-item&item=1147973891260674

Tipp Man

The sooner the Coop is away from the PLC the better

Good to see that in a few years the Coop has the option to buy out the PLC, hopefully everything going well this will be the case

Pension hole is a worry though

freedominacup

Tipp Man wrote: »

The sooner the Coop is away from the PLC the better

If that's what floats your boat then grand but this is not the way to do it. Sell all of the Plc shares realise the cash and bank it. Then wait. When Nestle or some other large international dairy processor is in the market for what they are calling DII then you know you're getting some value.

I've just checked my pockets I have a fiver spare and I'm willing to pay that for DII and that's the highest bid so far. If you want the Irish dairy business pay what you believe it's worth. Bidding against yourself or creating a market because you think you have some spare cash based on a share value is crazy.

There are a whole series of options available none of them remotely as unfavourable as this one including taking the whole operation private. These deals are about short term gain for institutional investors if you think they are about anything else then you're only fooling yourself.

This our business we'll only get to sell it once and we better make damn sure we do the best deal possible for ourselves. We own 70% of this business between the co-op shareholding and our own private holdings yet we are treated as if we own 7 shares and you are advocating we just roll over and accept this final indignity.

Tipp Man

freedominacup wrote: »

If that's what floats your boat then grand but this is not the way to do it. Sell all of the Plc shares realise the cash and bank it. Then wait. When Nestle or some other large international dairy processor is in the market for what they are calling DII then you know you're getting some value.

I've just checked my pockets I have a fiver spare and I'm willing to pay that for DII and that's the highest bid so far. If you want the Irish dairy business pay what you believe it's worth. Bidding against yourself or creating a market because you think you have some spare cash based on a share value is crazy.

There are a whole series of options available none of them remotely as unfavourable as this one including taking the whole operation private. These deals are about short term gain for institutional investors if you think they are about anything else then you're only fooling yourself.

This our business we'll only get to sell it once and we better make damn sure we do the best deal possible for ourselves. We own 70% of this business between the co-op shareholding and our own private holdings yet we are treated as if we own 7 shares and you are advocating we just roll over and accept this final indignity.

Wow that's some incoherent rant

So the Coop should take the PLC private should it? how is it going to fund the purchase of the remaining 45% odd shares?

Some numbers: with a market cap of 1.8 billion the Coop would need approx 800m to buy out the shareholders (all of them not just the non farmers) it then needs what 150-200 million to set up the new processing plant.

So you think the Coop has about 1 billion to spare do you? or the capacity to borrow that money given that it couldn't sell shares

Tipp Man

Re Glanbia - there seems to be some kind of misplaced love for it. It's like the girlfriend that cheats on you continously yet you still keep coming back for more

People need to wake up

Glanbia are ****e at paying for the milk - i can get at least a cent or 2 more from dairygold who are literally driving past the gate

Glanbia are robbing farmers blind - locally i can easily get the following items much cheaper from much smaller merchants - concrete tanks, plastic tanks, nuts, fertiliser even god damn wellingtons.

Glanbia can't even deliver fertilser with a piggy back forklift now - they have 2 fellas in a tiny truck manually lifting off the bags - if it's big bags you need the front loader on - they are an absolute joke

We have been taken for a ride for long enough - the PLC are after 1 thing and thats profit - that's fair enough but i don't want it at my expense. They litteraly don't give a damn about Irish dairy farmers - the sooner we are shot of them the better

freedominacup

Tipp Man wrote: »

Re Glanbia - there seems to be some kind of misplaced love for it.

Glanbia are ****e at paying for the milk - i can get at least a cent or 2 more from dairygold who are literally driving past the gate

We have been taken for a ride for long enough - the PLC are after 1 thing and thats profit - that's fair enough but i don't want it at my expense. They litteraly don't give a damn about Irish dairy farmers - the sooner we are shot of them the better

Apparently we're in general agreement. We need to get clear of the plc. On the matter of taking it private €800 million is probably overstating it a bit. I think shareholders could be offered co-op shares. Naturally only active farmers would get voting rights from these shares and only one vote per shareholder anyway. If only 50% of farmers took up the co-op share offer that would leave yo looking for €675 million approx to finance the buy out or a bit less than 3.5 years profits at the rate announced today. LBO anyone. Who said they can't sell shares by the way?

With regards to you not wanting the PLC making profit at your expense then your support for this jv is baffling. Where do you think the "markets" for the powder from this new plant are? I'll take a good bit of convincing that they're not mainly Glanbia plc's nutritionals business. I don't think that glanbia at one remove are going to be giving you a better return than glanbia direct.

We're being asked to buy into a plant whose peak output every year will coincide with NZ dumping their surplus onto world markets another stroke of genius from the glanbia board.

Min

The investors in Glanbia PLC seem happy, shares up near 6% today.

freedominacup

Min wrote: »

The investors in Glanbia PLC seem happy, shares up near 6% today.

Yup. They'd obviously thrilled by co-op shareholders getting a hugely favourable deal that was going to impact negatively on their returns over the next few years.

Tipp Man

freedominacup wrote: »

Apparently we're in general agreement. We need to get clear of the plc. On the matter of taking it private €800 million is probably overstating it a bit. I think shareholders could be offered co-op shares. Naturally only active farmers would get voting rights from these shares and only one vote per shareholder anyway. If only 50% of farmers took up the co-op share offer that would leave yo looking for €675 million approx to finance the buy out or a bit less than 3.5 years profits at the rate announced today. LBO anyone. Who said they can't sell shares by the way?

With regards to you not wanting the PLC making profit at your expense then your support for this jv is baffling. Where do you think the "markets" for the powder from this new plant are? I'll take a good bit of convincing that they're not mainly Glanbia plc's nutritionals business. I don't think that glanbia at one remove are going to be giving you a better return than glanbia direct.

We're being asked to buy into a plant whose peak output every year will coincide with NZ dumping their surplus onto world markets another stroke of genius from the glanbia board.

As of today the market Cap of Glanbia is 1.84 billion so to buy what is it 47% of the shares (i.e. the none Coop shares) would cost 864 milllion. The 800 million is actually understating it as you would generally pay more than market value for the shares to take them private

and that is not including any funding for the new plant

On your other point - why would any investor (farmer or non farmer) take shares in the Coop (which are non tradeable) when they have highly liquid shares in the PLC? And then with no voting rights??

On the markets issue - we would not tied to Glanbia PLC - so the markets would be the same as for any dairy exporter in the world. We would not have to supply the PLC but it would be a good starting point

freedominacup

Tipp Man wrote: »

As of today the market Cap of Glanbia is 1.84 billion so to buy what is it 47% of the shares (i.e. the none Coop shares) would cost 864 milllion. The 800 million is actually understating it as you would generally pay more than market value for the shares to take them private

and that is not including any funding for the new plant

On your other point - why would any investor (farmer or non farmer) take shares in the Coop (which are non tradeable) when they have highly liquid shares in the PLC? And then with no voting rights??

On the markets issue - we would not tied to Glanbia PLC - so the markets would be the same as for any dairy exporter in the world. We would not have to supply the PLC but it would be a good starting point

You're fixated on the 47% my proposal if adopted by the co-op assumes that the majority of farmer shareholders buy into it and are happy to take the co-op shares in exchange for their plc shares. Obviously co-op shares have little attraction for non-farmers but they would have to be offered the option to stay within takeover rules. The more shareholders who sign on for this deal the less cash that has to be found. BTW when did co-op shares become non-tradeable? Afaik there are at least two trading periods every year. I know of one farmer in my area who bought €100,000 worth of co-op shares in one of the trading periods last year.

Why is this new plant so much of a given. To me it's a white elephant. We have a number of plants producing a wide variety of products from milk powder to fresh consumer products and now the plan is to shove all of the increase in production into one low value low margin product. The 2cpl levy if spent on increased production on the shoulders of the production season would at least have the flexibility of not being spent in a low price season. The current plan means that in a repeat of '09 you'll have to make your choice between the levy being charged on less litres or buying extra concentrates to supply milk at in or around 20cpl.

Honestly how far do you think you'd get in a funding pitch with the line "the markets would be the same as for any dairy exporter in the world". Your feet wouldn't touch the ground. You want €120 million of my cash your going to need a bit more market research than that. We're being told that Glanbia plc will only invest in a project with a projected return on investment greater than 13% whereas we're expected to invest in a plant with a projected margin of less than 4%.

Tipp Man

freedominacup wrote: »

You're fixated on the 47% my proposal if adopted by the co-op assumes that the majority of farmer shareholders buy into it and are happy to take the co-op shares in exchange for their plc shares. Obviously co-op shares have little attraction for non-farmers but they would have to be offered the option to stay within takeover rules. The more shareholders who sign on for this deal the less cash that has to be found. BTW when did co-op shares become non-tradeable? Afaik there are at least two trading periods every year. I know of one farmer in my area who bought €100,000 worth of co-op shares in one of the trading periods last year..

I am fixated with the 46% because it amounts to over 800 million that would need to be found to take the PLC private. That is a huge amount of money that the Coop doesn't have and has no way of getting it without huge borrowing. You are making 1 hell of an assumption that the farmers will take Coop shares in lieu of PLC shares - to be honest i think that any farmer who already has Coop as well as PLC shares would be off their head to swap them and be left with no PLC shares.

Also giving PLC shareholders Coop shares inlieu of cash is not a free transaction - it costs the current Coop shareholders as their share of the Coop will be significantly diluted.

As for your local farmer - he must have completly dominated the share trading for a whole year - to put it in context only 81,000 Coop shares were traded in 2009 (or 2010 cant remember which) at a price of circa €2

freedominacup wrote: »

Why is this new plant so much of a given. To me it's a white elephant. We have a number of plants producing a wide variety of products from milk powder to fresh consumer products and now the plan is to shove all of the increase in production into one low value low margin product. The 2cpl levy if spent on increased production on the shoulders of the production season would at least have the flexibility of not being spent in a low price season. The current plan means that in a repeat of '09 you'll have to make your choice between the levy being charged on less litres or buying extra concentrates to supply milk at in or around 20cpl.

Honestly how far do you think you'd get in a funding pitch with the line "the markets would be the same as for any dairy exporter in the world". Your feet wouldn't touch the ground. You want €120 million of my cash your going to need a bit more market research than that. We're being told that Glanbia plc will only invest in a project with a projected return on investment greater than 13% whereas we're expected to invest in a plant with a projected margin of less than 4%.

The simple fact of the matter is that whether you like it or not the amount of milk in the Glanbia area is going to increase significantly from 2015 - anything in the range of 25-50%. So how on earth is all that going to be processed without investing in the infrastructure to deal with it?? Either Glanbia (in some form) takes in no new milk post 2015 or it invests - those are the choices

On the markets - its not my job to find the markets - that's why the big boys get paid the big bucks. But the "experts" are all saying that demand for milk products will continue to grow in the medium to long term - there is no reason why Glanbia (in some form) can't expect to get its share of this increased demand - but if we don't have the production capacity to produce the product then its all the matter what markets are there for it.

Conflats

The real question that should be asked why the f**k will glanbia and dairygold not join up to build one big plant cut costs and try to actually make out to the world they know what they are doing the fragmentation thing needs to be dealt with and the quota going in 2015 should be the best chance to do it join up the small lads and reduce costs and everyone reading off the 1 sheet instead of everyone making some cheese, powders etc and all trying to sell against each other

freedominacup

Tipp Man wrote: »

I am fixated with the 46% because it amounts to over 800 million that would need to be found to take the PLC private. That is a huge amount of money that the Coop doesn't have and has no way of getting it without huge borrowing. You are making 1 hell of an assumption that the farmers will take Coop shares in lieu of PLC shares - to be honest i think that any farmer who already has Coop as well as PLC shares would be off their head to swap them and be left with no PLC shares.

Also giving PLC shareholders Coop shares inlieu of cash is not a free transaction - it costs the current Coop shareholders as their share of the Coop will be significantly diluted.

As for your local farmer - he must have completly dominated the share trading for a whole year - to put it in context only 81,000 Coop shares were traded in 2009 (or 2010 cant remember which) at a price of circa €2



The simple fact of the matter is that whether you like it or not the amount of milk in the Glanbia area is going to increase significantly from 2015 - anything in the range of 25-50%. So how on earth is all that going to be processed without investing in the infrastructure to deal with it?? Either Glanbia (in some form) takes in no new milk post 2015 or it invests - those are the choices

On the markets - its not my job to find the markets - that's why the big boys get paid the big bucks. But the "experts" are all saying that demand for milk products will continue to grow in the medium to long term - there is no reason why Glanbia (in some form) can't expect to get its share of this increased demand - but if we don't have the production capacity to produce the product then its all the matter what markets are there for it.

You're right on the option of taking the business private it would be expensive but if the will was there I think it could be done. I really only argued it to try to get a debate going. My point is that there are options. The co-op can sell all or a good majority of it's shares and bank the cash as another option. Then take it's time and invest the cash where it gives us the best return.

At the moment the co-op is being bounced into a deal by the plc board. There seems to be a lot of deadline setting and ultimatums from the plc board in the negotiations. We keep hearing "the co-op must do X or there will be...... vague unspecified consequences". Bottom line is we have the cash/equity and they want far too much of it for what we are getting. Don't forget that taking your close of business valuation if we sold just under 11% of the shares today we can fund that plant ourselves 100%, own it 100% and process milk from wherever. Point is we would have €200 million in the bank and still have a bigger shareholding in the plc than under the current "plan". We can then invest in whatever manufacturing infrastructure delivers us the best return not the one that produces cheap inputs for glanbia plc.

I know it's not your job to find markets but it's definitely someones. How far do you think Moloney would get in a meeting with a group of banks or pension funds if he was looking for loans or to sell bonds to finance this project with an assertion of oh the markets are there.... we're sure. I want a good indication where these markets are. As far as I can see the only market they are aiming this plant at is glanbia plc which will put it firmly in the price taker section of the market.

There are markets there but you need the correct products for them. For my own part I believe there are a lot of oppurtunities in Africa where especially in countries with stable governments and working democracies. A new middle class is emerging and much the same as China 15-20 years ago they are aspiring to western lifestyles and diets. Flogging 30% of our output into milk powder isn't going to leave us with much capacity to satisfy a demand for consumer product in these new markets. We missed the Chinese boat 15 years ago when the IFA demanded that the government look for an extension of the milk quota regieme let's not shoot ourselves in the foot again by tying all of our increased production to a stack 'em high an sell 'em cheap business.

JohnBoy

Conflats wrote: »

The real question that should be asked why the f**k will glanbia and dairygold not join up to build one big plant cut costs and try to actually make out to the world they know what they are doing the fragmentation thing needs to be dealt with and the quota going in 2015 should be the best chance to do it join up the small lads and reduce costs and everyone reading off the 1 sheet instead of everyone making some cheese, powders etc and all trying to sell against each other

I think (based only on what I've read, and reading between the lines a bit)....

Dairygold have looked at kerry and glanbia, and all they see is the PLCs riding the milk supplier.

Why would they, as a co-op, want to get in on that action?

freedominacup

JohnBoy wrote: »

Why would they, as a co-op, want to get in on that action?

Why don't we as farmers at least investigate the possibility of doing our own deal with dairygold. If we sell just 4% of our shareholding in glanbia we bring over €70 million to the party. Dairygold bring something similar and that J.V. needs funding of around €60 million from other sources. The pool of milk that would have to fund that €60 million would obviously be substantailly larger therefore the cost to us as farmers is much lower as are the risks of a lack of throughput reducing the plants viability. Plus we still have a majority stake in glanbia plc.

There are quite a number of ways this can be done and none of them require any input or permission from the board of glanbia plc.

whelan1

Conflats wrote: »

The real question that should be asked why the f**k will glanbia and dairygold not join up to build one big plant cut costs and try to actually make out to the world they know what they are doing the fragmentation thing needs to be dealt with and the quota going in 2015 should be the best chance to do it join up the small lads and reduce costs and everyone reading off the 1 sheet instead of everyone making some cheese, powders etc and all trying to sell against each other

too many chiefs;)

freedominacup

whelan1 wrote: »

too many chiefs;)

Yer not wrong. Should be a precondition of any farmer support for any J.V. that the selection procedure for co-op boards be tightened up considerably. If you can't run your own business as well as at least the top 5% (the basis for measurement is up for discussion whether it be audited accounts/profit monitor etc) then you should simply not be eligible to go forward for election. No more electoral areas, if the best 4 candidates in a particular election happen to live on the same road in North Wicklow or in the Mallow area then so be it they're the best candidates they should be the ones selected.

We have an oppurtunity to change a good few things over the next couple of years and we'll regret not making best use of our chance.