Glanbia Regulatory News (GLB)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Glanbia plc announces it has signed binding legal agreements to dispose of its 40% holding in Glanbia Ireland to Glanbia Co-op for €307 million

8 December 2021, Glanbia plc ("Glanbia" or the "PLC"), the global nutrition group, and Glanbia Co-operative Society Limited ("Glanbia Co-op" or the "Co-op") have signed binding legal agreements, subject to certain approvals and conditions, for the disposal of the PLC's 40% interest in Glanbia Ireland DAC ("Glanbia Ireland" or "GI") to Glanbia Co-op (the "Proposed Transaction") for a purchase price of €307 million.

Update on the Proposed Transaction

On 10 November 2021, Glanbia announced that it had agreed a non-binding memorandum of understanding ("MOU") for the disposal of the PLC's 40% interest in Glanbia Ireland to Glanbia Co-op. The PLC has now entered into binding legal agreements with the Co-op in connection with the sale.

Strategic rationale for the Proposed Transaction

The board of the PLC believes the Proposed Transaction will continue the alignment of Glanbia's portfolio through the strategic focus on global nutrition via its platforms, Glanbia Performance Nutrition ("GPN") and Glanbia Nutritionals ("GN"), and through strategic joint ventures.

As a brand owner and provider of value added nutrition solutions serving high growth markets, the PLC will increasingly focus on its global nutrition strategy.

The Proposed Transaction will also allow the PLC to deploy the capital received from the Proposed Transaction in investment to drive further growth and to return capital to shareholders.

Glanbia Ireland

Glanbia Ireland is a joint venture owned 60% by Glanbia Co-op and 40% by the PLC. Glanbia Ireland is the largest milk processor and grain buyer in Ireland, producing a range of value-added dairy ingredients and consumer products as well as selling farm inputs. Glanbia Ireland operates 11 processing plants, 52 agri retail branches and has over 2,000 employees.

As of the half year ended 3 July 2021, the value of the gross assets the subject of the transaction was €225.2 million[1] and the profit before tax attributable to the PLC's interest in Glanbia Ireland for the full year ended 2 January 2021 ("FY 20") was €23.9m[2]. Glanbia Ireland contributed 8.5 cent to Glanbia's adjusted earnings per share in FY 20.

Proposed Transaction consideration

The consideration payable to the PLC in respect of the Proposed Transaction is €307 million, to be paid in cash on completion. The consideration is not subject to any adjustment mechanisms post completion of the Proposed Transaction. The Co-op has informed the PLC that it is in the position, if required, to fund the consideration through a combination of existing cash resources and debt facilities.

Use of proceeds and financial effects of the Proposed Transaction

The proceeds from the Proposed Transaction will be primarily invested in growth opportunities with up to 50% of the proceeds being returned to shareholders via a share buyback.

As completion of the Proposed Transaction is currently expected to take place in the first half of 2022, the disposal of the PLC's interest in Glanbia Ireland would therefore be reflected in the Group's accounts for the financial year ending 31 December 2022 and would be expected to be dilutive to the adjusted earnings per share of Glanbia on a full year reported basis in 2022.

Conditions to Completion

The Co-op is a substantial shareholder in Glanbia for the purpose of the listing rules of Euronext Dublin and the Financial Conduct Authority (the "Listing Rules"). The Proposed Transaction is classified as a related party transaction under the Listing Rules and is subject to, and conditional upon, the approval of the shareholders of Glanbia, other than the Co-op or persons connected with the Co-op (the "Independent Shareholders"). The approval of Independent Shareholders of the Proposed Transaction will be sought at an extraordinary general meeting of Glanbia (the "EGM"), details of which will be included in a circular which will be published and sent to shareholders early in 2022 (the "Circular").

The Circular will contain a notice convening an EGM, with date, time and location, and a shareholder proxy voting form. The purpose of the EGM will be for the Independent Shareholders to consider and, if thought fit, approve, as an ordinary resolution, the Proposed Transaction. Glanbia will make a further notification upon the publication of the Circular. The Proposed Transaction also constitutes a Class 2 transaction under the Listing Rules.

The Proposed Transaction is also subject to certain other conditions, which are summarised below:

· Approval of the Proposed Transaction by the Co-op's members. This approval will be sought at a Special General Meeting of the Co-op scheduled for 17 December 2021;

· Any necessary regulatory approvals; and

· No material adverse change, subject to specific exclusions, having occurred to the business of Glanbia Ireland between the date of the binding legal agreements and completion of the Proposed Transaction.

Other key terms of the Proposed Transaction are as follows:

· GIanbia Ireland and the Co-op will change their respective names following a transitional period post completion of the Proposed Transaction to names which do not include "Glanbia";

· PLC will fund costs of €8 million to be incurred by GIanbia Ireland, related to pension obligations and separation and rebranding costs in connection with the Proposed Transaction;

· Post completion of the Proposed Transaction certain corporate, business and IT services will continue to be provided by the PLC to GI and the Co-op for a defined period;

· GI will maintain certain commercial arrangements with the PLC for the sale, purchase and distribution of various products until the GI name change has been implemented;

· PLC will be substituted by Glanbia Ireland as the principal employer of the Glanbia Pension Scheme and the Glanbia Defined Contribution Pension Scheme (together, the "Current Schemes"). PLC will establish new mirror pension schemes for PLC future service. The accrued assets and liabilities attributable to PLC members in the Current Schemes will, subject to the required consents, also be transferred to the new schemes;

· Within one year of completion of the Proposed Transaction, all amounts owed by GIanbia Ireland to the PLC Group in respect of an existing shareholder loan of €28.8 million will be satisfied (this repayment is in addition to the consideration payable for the Proposed Transaction); and

· On or before completion of the Proposed Transaction all PLC representatives on the board of directors of any GIanbia Ireland group company will resign.

Further details on the terms and conditions of the Proposed Transaction will be included in the Circular.

Inside information

This announcement contains inside information as set out in the paragraph titled "Update on the Proposed Transaction". The person responsible for arranging for the release of this announcement on behalf of Glanbia plc is Michael Horan, Company Secretary. The time and date of this announcement is, at 7am GMT, 8 December 2021.

Advisers

Advisers to Glanbia PLC: Financial adviser and Sponsor: Credit Suisse International and Legal adviser: Arthur Cox LLP

Advisers to the Co-op: Financial adviser: KPMG and Legal adviser: Matheson

ENDS

For further information contact

Glanbia plc +353 56 777 2200 

Liam Hennigan, Group Director of Strategic Planning & Investor Relations:+353 (0)86 046 8375

Martha Kavanagh, Director of Corporate Affairs: +353 87 646 2006