Glanbia has agreed to sell its stake in the Glanbia Cheese mozzarella manufacturing business to Denver-based Leprino Foods, its partner in the joint venture for a cash consideration of €160m.

Leprino, the largest manufacturer of mazzarella in the world, will take full ownership of Glanbia Cheese, which the companies launched in 2000.

The business is a leading mozzarella maker in Europe that comprises Glanbia Cheese UK and Glanbia Cheese EU. Leprino employs some 5,000 people in over 55 countries.

The non-binding agreement also allows for the possibility of additional contingent consideration of up to €25m over the next three years, dependent on business performance. 

Glanbia Cheese has three manufacturing facilities in Portlaoise, Wales, and Northern Ireland, and the existing management team led by CEO Paul Vernon will remain in place following the completion of the deal.

In Association with

Subject to the completion of due diligence and execution of definitive agreements, it is expected that the potential transaction will close in the first half of 2023.

"We look forward to working with Paul Vernon and the local team to ensure a seamless transition for our employees, customers and suppliers," said Mike Durkin, CEO and president of Leprino Foods.

"We intend to take advantage of our combined expertise, knowledge and strengths to further enhance the business and are committed to ongoing investments in the core capabilities and the talented people that set us apart from our competition."

Siobhán Talbot, group managing director at Glanbia, said the two companies had "enjoyed many years of successful partnership" since the launch of Glanbia Cheese, but that the firms' focus had shifted to nutrition and consumer health and wellness products.

"From the plc’s perspective the logic of this transaction is clear as it allows us to focus on our core better nutrition strategy and to allocate further capital to our global growth businesses," Talbot continued.

"We have had a long and successful partnership with Leprino Foods, and we wish Paul and the entire team every success for the next chapter of the business."

Paul Vernon said Glanbia Cheese was excited by the proposed transaction, and that the move would be a strong fit for the business.

"We look forward to working with Leprino Foods to build on our success as a trusted supplier and business partner to our customers in the pizza category across the UK and Europe," he added.

Glanbia results

The announcement comes as Glanbia announces its results for the 2022 full year, showing revenues of €5.6bn and EBITDA of €347.1m.

Group revenues increased 21.2% on a constant currency basis and 34.4% on a reported basis year-on-year from turnover of €4.2bn in 2021. Earnings, meanwhile, increased 13.5% constant currency and 28.3% reported from €270.6m the previous year.

Glanbia reported its highest-ever adjusted earnings per share of 104.2 cent, up 17.6% or 33.6% from 77.84c a year earlier, while basic EPS of 93.42c was up from 57.57c.

The company had operating cash flow conversion of 85.7%, and net debt to adjusted EBITDA of 1.12 times.

In volumes terms, sales were down from 2021 across Glanbia's performance nutrition (-21.%) and nutritional solutions (-3.5%) businesses, but each division increased prices by more than 16% last year, with revenues up 14.6% and 12.6%, respectively.

Glanbia performance nutrition experienced EBITDA growth at 10.5% while nutritional solutions grew EBITDA by 13%, both at more or less consistent margins compared to 2021.

The Kilkenny-headquartered company returned €173.5m to shareholds via buybacks, with a further €50m share buyback programme announced, reflecting the firm's strong cash flow and financial position.

Glanbia recommended a final dividend of 19.28c per share for a total 2022 dividend of 32.21c.

"Looking forward, our strategic focus on ‘better nutrition’ growth platforms is clear and we are confident that it will drive sustained growth in the coming years, delivering the targets set out at our recent capital markets event," Talbot said.

"This continued evolution of our portfolio will enable Glanbia to focus on driving growth through our focused market leading positions as a better nutrition company, playing into strong underlying consumer health and wellness trends," she added in light of the Glanbia Cheese announcement and other disposals.

Glanbia expects adjusted EPS growth of 5-10% on a constant currency basis in 2023.

Photo: Siobhán Talbot. (Pic: Aidan Crawley/Bloomberg via Getty Images)