Fonterra’s farmer shareholders have granted approval for the company’s proposal to divest its consumer products division. The Mainland Group and its associated businesses are set to be sold to Lactalis for a sum of $4.22 billion.
A resounding 88.47% of farmer shareholders voted in support of this divestment decision in a special virtual meeting. The company asserts that this level of shareholder support exemplifies one of the core principles that sets Fonterra apart from other processors in the market.
Fonterra Chairman Peter McBride voiced his appreciation for the active participation of the farmer shareholders throughout the decision-making process. Since the exploration of divestment options was initiated in May of the previous year, and especially over the past few weeks when the full details were made available, there has been a significant uptick in discussion and engagement from the farmers.
McBride commented on the strategic implications of the divestment, stating, “We have thoroughly examined our strategic context, our strengths, and the way we create value for our farmer owners as a cooperative. This divestment will result in a more simplified and focused business, the value of which cannot be overstated.”
To approve the sale, Fonterra required more than half of the total votes, a condition that was met with ease due to the high percentage of votes supporting the divestment.
The divestment process of Mainland Group’s business from Fonterra is now pending regulatory approvals. These approvals are currently underway, and the completion of the transaction is expected to occur in the first half of the coming year.
In addition, Fonterra has revealed plans to make a significant investment in its dairy operations. The company intends to allot NZ$75 million ($66 million) towards expanding butter production at its Clandeboye site located in South Canterbury.
What percentage of Fonterra’s farmer shareholders voted in favour of the divestment?
Approximately 88.47% of Fonterra’s farmer shareholders voted in favour of the divestment.
What will the divestment result in for Fonterra?
The divestment will lead to a more simplified and focused business for Fonterra.
What significant investment has Fonterra planned following the divestment?
Fonterra has planned to invest NZ$75 million ($66 million) in expanding butter production at its Clandeboye site in South Canterbury.
