GLG Partners Reportedly Builds Up €25m Short Bet That Shares In Glanbia Will Fall In Price
The London hedge fund controlled by the giant Man Group, GLG Partners, has reportedly built up a €25 million short bet that the shares in Irish food company Glanbia will fall in price.
As reported by The Business Post, it is the third such bet that GLG has taken against Glanbia in the last three weeks, as the company's share price has slumped from €14 to just under €13.
A short trade is reportedly a risky transaction in which traders borrow shares from a broker and sell them on the open market, betting that the price will fall sufficiently to allow them to buy new shares at a lower price, and return them to the broker, thus pocketing the difference as profit on the trade.
GLG is reportedly only the latest fund to short Glanbia's shares. Earlier this year, an arm of billion-dollar US investment fund BlackRock reportedly made several such trades, each reportedly at approximately €20 million.
Over that period, between February and early May, the company's shares reportedly rose from €10 to more than €14, though there were reportedly periods in which it dropped briefly.
Glanbia Ireland Stake Sale
Glanbia Ireland is reportedly the country’s largest dairy company and owns a number of household food brands, including Avonmore, Kilmeaden, Premier milk and Wexford cheese.
Glanbia Ireland is reportedly currently owned in a 60-40 joint venture arrangement between Glanbia Co-op, an investment vehicle owned by dairy farmers, and Glanbia plc, the performance nutrition company listed on the stock market.
To fund the proposed transaction, Glanbia Co-op will reportedly raise approximately €150 million in debt and will reportedly also sell a significant chunk of its 32% shareholding in Glanbia plc to raise the remaining capital needed.
The Co-op is reportedly likely to sell up to 5% of its shares in Glanbia plc on the open market to raise the required capital, but if GLG's short bet is correct and Glanbia’s shares fall in value, the Co-op reportedly may have to sell more of its shares to make up the difference.
© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.