The Glanbia de-merger vote on separating the co–op from the plc resulted in a defeat for the proposals this week. A 75 per cent vote was needed but was short by just 2 per cent or 80 votes, we are told. So what is the future? Will there be another vote? The Chairman and his board did a huge amount of work on the project and must be very disappointed.
The plc or company side that was to operate separately would mainly be based in America with the Irish business returning to co-operative ownership. This would have been positive for Irish farmers with perhaps better product prices as the profit motive would be less in a co-op than in a plc. But, as the Chairman said, there was only one deal on the table and there was no plan B. But surely, with such a close vote, another effort could be made.
Maybe, after a time of reflection, people may vote on it again and see the benefits of the new structure. Could there be a new deal with a new package offering an extra incentive whether shares or otherwise? The hard work on the proposal and the logic of it suggests that farmers do want it. Some farmers want a better deal on their shares. This is a gamble as shares can rise and fall as we saw in the last week so whether a deal can be afforded is something the accountants will have to work out.
Farmers are naturally cautious and, as in some EU referenda, if they do not fully understand it they do not vote for it. Was this the case here?
There will be many interpretations of the result. The younger farmers did seem more in favour than older ones who had some affection for the successes of the plc.
A positive vote would have meant cash for shareholders. This would have been welcome in the current climate and would have helped to reduce business or personal debt. It would also have boosted cash flow at a time when the banks are very tight with money.
Would a longer debate have enabled a bigger turn out and vote? To use an old phrase, on ‘mature re collection’ there may be a wish to vote for it again.
Another vote could well be possible but whether there is a more attractive offer will be an open question.
Glanbia boss John Moloney, did note afterwards that the company was still very strong in its businesses. He did not rule out another vote.
Some experts believe that another vote next year could be possible but what share prices will pertain then is unknown. Much would depend on milk and daily prices at that time. The company will be trying to grow in the meantime and keep the issue of co-op separate. During that period, farmers will have less control on milk prices compared to if the deal had gone through. There will be much debate on this in the next few months and we will see what can be done in the circumstances.