Activist shareholders call for Glanbia dissolution to ‘unlock value’

GLANBIA should sell its European joint venture cheese business and spin off its performance nutrition business and list on stock markets in the United States and Ireland, according to an activist investor who is pushing for sweeping changes at the group.

Learway Capital insists the moves would unlock significant value in the group, effectively doubling its overall valuation to more than €6 billion.

In a letter to Donard Gaynor, Glanbia’s chairman, Gianluca Ferrari, Clearway Capital’s founder and CEO, said that the Irish group’s Glanbia Performance Nutrition unit had “lost touch with its customer base”.

Clearway has acquired less than a 3 percent stake in Glanbia, whose shares are currently trading at €11.10, giving it a market cap of €3.07 billion.

“We believe Glanbia Plc should be trading above €21.08 per share, but the market continues to price the company at a significant discount to its fair value – and for good reason,” stressed Mr Ferrari in the letter released today , which was published last month and was sent to the Glanbia Chairman

“The execution of Glanbia Performance Nutrition was sub-par,” claimed Mr. Ferrari. “Frequent profit warnings coupled with a confusing corporate structure and questionable capital allocation complicate the equity story, and overarching sustainability concerns pose significant challenges to the company’s long-term viability.”

Glanbia’s Performance Nutrition (GPN) division owns products such as Optimum Nutrition, SlimFast and Amazing Grass. The division generated €1.3 billion of Glanbia’s total sales of €4.2 billion last year.

Mr. Ferrari also claimed in his letter that the spin-off of the GPN entity into a separate company listed in the US with a secondary listing in Ireland would help unlock in excess of €10.88 in additional value per share.

He has also insisted that this move, coupled with a rationalization of Glanbia’s European cheese joint ventures, would position the group “to create long-term value for its shareholders by enabling each individual company to focus on the… to address the current challenges.”

Glanbia’s other main division is its Nutritionals segment, which generated sales of €2.9 billion last year.

Clearway Capital has also told Glanbia that it believes the SlimFast brand, which the group acquired for $350 million in 2018, is at “risk of permanent impairment” due to “recent developments”.

SlimFast consumption in North America fell 4.3 percent in the 52 weeks ended December 26, 2021, with Glanbia blaming headwinds in the nutrition category.

Clearway has told Glanbia, of which Siobhan Talbot is Managing Director, that it believes SlimFast’s performance indicates a “much broader and worrying problem”.

“The nutrition category no longer reflects today’s consumer preferences and the brand has failed to evolve its message and product portfolio accordingly,” it said. “We believe the company needs to work to shift the SlimFast brand message and product portfolio away from diets and towards a healthy lifestyle.

In his letter, Mr. Ferrari claimed that Glanbia’s Optimum Nutrition brands underperformed due to “an overall lack of customer loyalty, missed opportunities in the ready-to-drink market, poor execution of direct-to-consumer sales, lack of incorporation of sustainability into the product brand message.” and other shortcomings”.

He also said the economic characteristics of Glanbia’s Nutritional Solutions segment make it a “hidden gem” within the group’s “complex structure” that the market “clearly doesn’t appreciate.”

As a separate company, Clearway insists the division would benefit and “would trade conservatively on a market cap of at least €2.5 billion, or €9.00 per share.” Activist shareholders call for Glanbia dissolution to ‘unlock value’

Fry Electronics Team

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