Jim Bergin, CEO Glanbia Ireland and Glanbia Co-operative Society Limited and John Murphy, Chairman Glanbia Co-operative Society Limited talk to Overherd about the new Co-op transaction

Firstly, Jim, John, thanks very much for taking the time to speak with Overherd at Glanbia Ireland, this must be an extremely busy time for both of you?

Jim: I’m delighted to sit down with the team behind Overherd at Glanbia Ireland, any opportunity to discuss the new Co-op transaction with colleagues is very welcome, so thank you. Yes, it’s been an incredibly busy time, as it is for John, Sean Molloy, Pat O’Keeffe, James Brennan and Louise Hogan and many other people who have been instrumental in getting us to the point where we are now ready to seek formal approval from our farmer shareholders, and Glanbia plc shareholders. It is worth noting that the farmer facing teams are ‘flat out’ now calling all shareholders. The Co-op team lead by Niall Trainor are also fundamental to the project. It is very exciting as we approach the SGM on the 17^th of December.

John: It certainly has been busy, but it has also been a very exciting time for me and my fellow board-members. A full Co-op ownership model is something I’ve strongly believed for many years to be the right direction for Glanbia Ireland. As Chairman I’m honoured to work on behalf of Glanbia Co-op, GI employees and shareholders to achieve our ambition to become one of the leading Co-ops in Europe.

As the saying goes, timing is everything in life – what makes now the right time for Glanbia Co-op to become the full owners of Glanbia Ireland?

Jim: Since the creation of Glanbia Ingredients Ireland in 2012 and the lifting of Milk Quotas in 2015 we’ve seen exponential growth in our business. This growth continued with the creation of Glanbia Ireland in 2017 under our existing joint venture model and has led to investment in the growth in our business to the tune of €343 million. Our business model has served us well through this growth period and has helped us expand in line with the growth ambitions of our Suppliers. In relation to timing, the Co-op initiated their strategic review of its business earlier this year and the proposal to acquire the Glanbia plc shareholding in GI arose from that process and was positively received by the plc. Collectively we feel the time is right now to allow the two organisations to focus on their respective strategies and forge their own positive paths into the future for the benefit of all.  A Co-op model is a great model for the future as we work ever closer with our farm families on sustainability and great Irish dairy credentials.

Could you explain to us what a Co-op business model looks like and how it’s different from the current structure.

John: Day to day, very few people will notice any changes at all, the farmers’ milk will be collected, and our products will be produced and sold as usual. What will change is how value is distributed across the business, for example, as the Co-op will be wholly owned by our farmer members, there will no longer be a dividend paid to the Glanbia plc which means we can return greater value to our Suppliers. Through the creation of an Investment Fund, we will be able to pursue new opportunities for the Co-op, with the aim of driving higher returns for Members and new opportunities for everyone. Another change is the way in which the new Co-op’s board will be structured, we’ll be moving from having two boards to just one.

With the new Co-op being formed, this means we’ll no longer be known as Glanbia Ireland. Can you tell us what this means for the identity of our business?

Jim: As most colleagues will have heard by now, we will indeed have to change our company identity. This is of course a significant change and I’m well aware that we are very attached to the Glanbia brand. The development of a new identity is already underway. Our new identity is a really exciting opportunity to represent ourselves in a new way, while staying true to our current values and mission, and creating a new vision for the future. Our future identity will continue to represent who we are as a business, rooted in our Irish heritage while reflecting the communities we operate in and serve across the world.

Glanbia Ireland recently launched its new sustainability strategy ‘Living Proof’. Will our green credentials be strong in the new Co-op?   

John: There’s been some very hard work done by a large number of people in GI in developing Living Proof, and I was delighted to be part of the sustainability strategy launch earlier this year. That hard work and the considered insights behind the strategy will form a key part of the Co-op’s new identity. Our family farmers are extremely conscious of protecting and enhancing the environment and are fully bought in to our current sustainability targets. We’ll continue to work collectively with employees and local communities to ensure we’ve a sustainable business model for years to come. The era of sustainability is here to stay, and the new Co-op is here to support everybody to make it happen.

As you mentioned Jim, we’ve been part of Glanbia plc for a very long time. What shape will our relationship take with them in the future?

Jim: Firstly, it’s important to note that the new Co-op will be the largest shareholder in Glanbia plc following the transaction, we therefore have a vested interest in the success of that business. To put it into a Euro and Cents context, a one Euro increase in the plc share price currently creates value of approximately €60 million to the Co-op. On the commercial side of things, we will continue to have strong relationships with Glanbia plc who are the biggest customer in the world for whey protein isolate. And finally, many of the services currently provided by the plc; Shared Services, Corporate Services, IT Services and Procurement will also remain in place for up to three years to ensure a smooth transition to the new Co-op. Maintaining a healthy and strong relationship with the Glanbis plc is important to the success of both businesses.

What are the next steps towards the Co-op taking full ownership of Glanbia Ireland?

Jim: The next step is Glanbia Co-op holding an online Special General Meeting (SGM) with its eligible Members on Friday 17th December 2021. At this meeting, the Co-op’s 7,000 eligible shareholders will vote on its proposal to take ownership of Glanbia Ireland and there will also be a series of votes on related resolutions on that day.

The set of proposals have the unanimous support of the Board and Council of Glanbia Co-operative Society, so we hope that Members will take the time to log on and vote. The following step towards approval of the €307 million transaction will be to seek approval by Glanbia plc’s shareholders via an extraordinary general meeting (EGM).

Thank you both for your time, do you have any final words for readers of Overherd at Glanbia?

John: Thanks for the opportunity to talk with your readers. I’d just like to reiterate how proud I am to be working on behalf of all GI stakeholders as we set a new course for the business. I have every confidence in the success of the new business model, and I look forward to seeing the Co-op evolve and grow with confidence in our ambitions.

Jim: Just to add to John’s comments, I have every confidence in our business and the people behind it. We’ve built a modern, professional business over a number of years and this level of professionalism will continue with the Co-op. There are exciting developments on the horizon with the opening of our new Innovation Centre in Ballyragget, and our planned move to a new HQ in Abbey Quarter. In addition to the Investment Fund in place as part of the Co-op transaction, we are incredibly well placed for success into the future.