Shares in nutrition group Glanbia dipped on Wednesday after its largest shareholder, Tirlán Co-operative Society, sold a 6.8 per cent stake in the business to institutional stock market investors and the listed group itself at a slight discount to their previous closing price.
Tirlán plans to use the €230 million proceeds from the share sale, carried out at a 3.2 per cent discount to Monday’s closing price, to help repurchase €250 million of bonds issued in 2022 to help finance the co-op’s acquisition of full ownership of its milk processing joint venture with Glanbia.
The dairy processing business, whose brands include Avonmore milk and Kilmeaden cheese, is now known as Tirlán.
Glanbia, led by chief executive Hugh McGuire, bought 43 per cent of the co-op shares on offer on Monday evening for €100 million and plans to cancel the stock. This used up the remaining leeway the company had on a €150 million stock repurchase programme that has been running since earlier this year.
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Shares in Glanbia, whose key performance nutrition unit makes a suite of protein powders, including top-selling brand Optimum Nutrition, for gym goers and others, were down 0.8 per cent in early trading in Dublin, at €13.90.
Tirlán’s stake will fall to about 17.9 per cent from about 24 per cent, following the share sale and Glanbia’s planned cancellation of the stock it is repurchasing.
Goodbody Stockbrokers analyst Patrick Jenkins said the co-op share placing was a welcome development as it removes “any perceived overhang” of shares associated with the Tirlán bonds, while the stock buyback and cancellation will boost the group’s earnings per share by 2 per cent on an annualised basis.
“Overall, following the stock’s encouraging recovery since the first-half results, we retain our positive stance on shares,” he said.
Shares in Glanbia have rallied as much as 19 per cent since group raised its earnings forecast for the year in the middle of July while appointing a new chairman and announcing the sale of its underperforming Body & Fit unit. The company, which has been struggling to contend with a spike in the cost of whey proteins, a key input, said revenue for the first six months of the year increased by 6 per cent to $1.9 billion (€1.62 billion).
A previous series of disappointing earnings developments at the group had attracted the attention of German activist investor, Clearway Capital, which called for a “fundamental strategic review”.
Mr Jenkins said that Glanbia’s upcoming capital markets day for investors on November 19th could provide more impetus for the stock. A “possible realisation of value” – or sale – of the group’s dairy nutrition unit, which combines its US cheese and nutritional solutions protein portfolios, may also boost the group’s shares, he suggested.
Tirlán said it will remain the largest equity investor in Glanbia and continues to be “a strong supporter of its strategy”.
