Fonterra Co-operative Group Ltd., has announced it has agreed the sale of its global consumer and associated businesses to Lactalis for NZ$3.845 billion.
The deal includes Fonterra’s global consumer business and consumer brands as well as its integrated food service and ingredients businesses in Oceania (Australasia, Melanesia, Micronesia, and Polynesia) and Sri Lanka.
The sale will also include the cooperative’s food service business in the Middle East and Africa.
However the deal excludes Fonterra’s business in Greater China, and is subject to financial changes based on conditions such as farmer shareholder approvals.
However, the dairy cooperative confirmed it will continue to supply milk and other products to the divested businesses, meaning New Zealand farmers’ milk will still be found in brands including Anchor and Mainland.
Financials
Fonterra confirmed that there is potential for the sale price to elevate to $4.22 billion, if Bega licences held by Fonterra’s Australian business are included, with a value of $375 million.
The fate of Bega licences will be confirmed once a dispute with Bega Cheese Ltd., is resolved.
The co-op is targeting a tax-free capital return of $2 per share, which is approximately $3.2 billion, following completion of the sale.
Fonterra chairman Peter McBride said: “Alongside a strong valuation for the businesses being divested, the sale allows for a full divestment of the assets by Fonterra, and a faster return of capital to the co-op’s owners, when compared with an IPO.”
Fonterra
McBride added: “Following a highly competitive sale process with multiple interested bidders, the Fonterra board is confident a sale to Lactalis is the highest value option for the co-op, including over the long-term.
“The firm belief we have in Fonterra’s long-term strategy, gives the board the confidence to unanimously recommend this divestment to shareholders for approval.”
Fonterra chief executive officer Miles Hurrell said: “As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level.
“Fonterra farmers will continue to benefit from their success, with Lactalis to become one of our most significant Ingredients customers.”
Hurrell said the investment will allow Fonterra to deliver further value for farmer shareholders and New Zealand by focusing on its ingredients and foodservice businesses.
Lactalis
Lactalis CEO Emmanuel Besnier said: “With this acquisition, we significantly strengthen our strategy across Oceania, Southeast Asia and the Middle East.
“Combining the Fonterra consumer business operations and market leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets.”
Shareholders
Farmer shareholder approval will be sought after in late October or early November, with farmers being sent notice prior to the meeting.
In addition to that, farmers will be informed on the impact of the divestment on Fonterra’s financial outlook as well as the proposed capital return before the meeting.
Fonterra confirmed that capital return payments would be subject to a separate shareholder vote after the sale is completed.
The dairy co-op advised farmers that the amount of the capital return would be confirmed ahead of the vote.
If all conditions are met, the transaction is expected to be completed in the first half of the 2026 calendar year.
