Activist investor seeks to unlock significant value in Glanbia
The appearance of an activist investor on Glanbia’s shareholder register, Bloomberg revealed last Thursday, was like an inevitable twist in the history of the nutrition and food company.
In February, this column suggested that the sale of Glanbia Ireland’s remaining stake to Co-op Glanbia Plc would leave a cleaner, more attractive proposition – while potentially drawing investment bankers and other parties into circles.
With the Glanbia Ireland transaction closing just under two weeks ago, Clearway Capital has built up a stake and could reportedly “propose a range of actions aimed at improving the company’s valuation”.
For this reason, Clearway – and others – consider Glanbia an attractive target.
As of Thursday, Glanbia PLC had a market cap of around €3 billion. Taking into account the reduced group debt resulting from the sale to Glanbia Co-op, the market values Glanbia PLC at an enterprise value of around EUR 3.4 billion.
The “Nutritions” division had an EBITA (earnings before interest, taxes and amortization) of EUR 125 million last year. A multiple of 12x EBITA would value this part of the business at around €1.5bn. There are some additional stakes in joint ventures that could increase that number by 200 million euros to around 1.7 billion euros.
The higher-valued part of the business – consumer-facing GPN – had sales of €1.3 billion and an EBITA of €145 million last year. Activist investors see potential here. The division should trade at a premium to rivals like Simply Good Foods and BellRing, but the group’s share price has lagged behind.
An obvious way to unlock value would be to conduct a sales process for GPN in hopes of strong competition among major consumer groups, but there are several options.
A sale at twice the sales would generate €2.6 billion, while a sale at 20 times the EBITA would generate €2.9 billion.
If such prices were realized in a split, Glanbia could realize between 4.3 and 4.6 billion euros, a premium of between 900 and 1.2 billion euros on its current market value and a premium of between 30 percent and 40 percent on its current share price .
These are numbers on the back cover, but they show why Glanbia is attracting attention. Until recently, the co-op might have stood in the way of a breakup — but the timing could be just right.
DAA’s Saudi operations
Returning holidaymakers have probably already forgotten the inconveniences of meandering queues at Dublin Airport in recent weeks, with the joy of long-awaited breaks abroad outweighing any pre-flight frustrations.
A longer-lasting shadow, however, could be cast by the multi-million euro deal DAA struck with Saudi Arabia last month to operate its airport in Jeddah – a deal that has drawn criticism given Saudi Arabia’s human rights record.
CAPA: The Center for Aviation – an Australia-based global information network that describes itself as “the world leader in market research for the sector” – recently published a report on the transaction entitled “Ireland’s DAA International to relocate Jeddah Airport Manage: Opportunities” published and threats”.
It begins by saying the group has “developed a solid reputation at airports in parts of the world where some find management difficult”.
The report notes that “everyone who does business there lives in the shadow of growing concerns about human rights abuses – the war in Ukraine has put ‘abuse’ in the global spotlight, while Saudi authorities abandoned airport privatization plans a few years ago revive. ”
“In any event, the Dublin Airport Authority claims that as a state-owned company, they strictly follow government guidelines on regulations and countries with which they are allowed to do business.”
In a statement to the Sunday independentadded DAA: “The Gulf region is an important growth market for Ireland.
“We are working with our partners in the region on a range of socially responsible initiatives, including as a catalyst for expanding educational opportunities and empowering Saudi women.”
At a time of heightened geopolitical tensions, it is evident that the international airline industry is following this deal with interest.
https://www.independent.ie/opinion/comment/activist-investor-seeks-to-unlock-considerable-value-in-glanbia-41577385.html Activist investor seeks to unlock significant value in Glanbia