November 14, 2012 / 12:46 PM / 5 years ago

UPDATE 1-Glanbia co-op approves dairy joint venture

* 71 pct of shareholders in farmers’ co-op approve deal

* Deal cuts co-op stake from 54.4 to 51.4 percent

* 2nd vote will decide whether co-op cuts stake to 41.4 pct

DUBLIN, Nov 14 (Reuters) - Glanbia on Wednesday secured a deal to hand direct control of its Irish dairy subsidiary to a farmer-led cooperative which will agree to reduce its majority shareholding in the Irish food group.

Glanbia hopes the move will allow it to focus more on its high-margin U.S. cheese and international nutritionals businesses away from its lower margin dairy processing.

Members of Glanbia Co-op Society Ltd voted to approve the purchase of 60 percent of Glanbia subsidiary Dairy Ingredients Ireland via a new joint venture. Glanbia will retain the remaining 40 percent.

The deal, which will reduce the co-op’s stake in Glanbia to 51.4 percent from its current 54.4 percent is expected to be approved in a vote of Glanbia shareholders on Nov. 20.

The vote paves the way for a second ballot for the co-op to cut its stake by a further 10 percent to 41.4 percent. That vote will be held in two stages on Nov. 28 and Dec. 12.

That vote, however, would require the approval of 75 percent of shareholders, above the 71 percent who voted in favour of the joint venture on Wednesday.

Glanbia Chief Executive John Moloney said the vote marked a “significant and penultimate step” to the creation of the joint venture, which he said would allow the co-op’s farmers to boost processing capacity and maximise the benefits of the abolition of European Union milk quotas in 2015.

Glanbia shares were up 0.3 percent at 1210 GMT, ahead of the broader Irish market which was down 1.5 percent.

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