Glanbia Plc (GLB), one of the largest cheddar cheese producers in North America, raised its full-year targets and said its largest shareholder, Glanbia Co-operative Society Ltd. plans to cut its stake.
Glanbia raised its full-year adjusted earnings per share growth guidance to 8 percent to 10 percent for this year, up from 5 percent to 7 percent in May, as sales and profit rose in the first half. The Co-op, many of whose members supply milk and trade with Glanbia, plans to cut its stake in the Kilkenny, Ireland-based company to 41.4 percent from 54.4 percent, based on approval from Co-op members, the company said.
Glanbia plans to establish a joint venture with the Co-op in a transaction that will see the Co-op take a 60 percent stake in Glanbia’s Dairy Ingredients Ireland business, which includes its consumer product offerings. The Co-op will sell a 3 percent stake to fund investment in the joint venture and will seek approval from its members to reduce its holding in the listed company a further 10 percent to 41.4 percent.
“The transaction, if concluded, will release funds for Glanbia to singularly pursue its development objectives in nutritionals, an activity with strong growth potential,” said John O’Reilly, an analyst at Dublin-based stockbroker Davy, in a note.
The stock rose 2.6 percent to 6.16 euros in Dublin trading as of 11:12 a.m., extending this year’s gain to 33 percent.
The Co-op needs the approval of 75 percent of its members at two general meetings to reduce its stake under 51 percent. If approved, the Co-op would distribute a 7 percent shareholding in Glanbia to its members and sell 3 percent.
In May 2010, a plan to sell its Glanbia’s Irish dairy business to the Co-op failed after only 73 percent of Co-op members backed the deal. Glanbia’s Managing Director John Moloney said he has “high hopes” for the vote passing the threshold, and expects them to be held in November.
“It will also enable us to continue to focus on the success of our international growth strategy around nutritional ingredients and U.S. cheese,” Moloney said in telephone interview. “That is the business sector that has been driving the performance of the group.”
Glanbia’s first-half sales increased 1.6 percent to 1.36 billion euros ($1.7 billion). Adjusted earnings per share rose 1.3 at constant currency to 28 euro cents in the same period as sales at its U.S. cheese and global nutritional business rose 8.6 percent on the same basis.
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