Fonterra, a leading dairy company, has announced it is selling its global Consumer and associated businesses to French dairy enterprise, Lactalis. The transaction is valued at NZ$3.845 billion ($3.48 billion).
The sale incorporates Fonterra’s global consumer business (excluding Greater China) and a range of consumer brands such as Mainland, Anchor, Perfect Italiano, and Anmum. Also included are the integrated foodservice and ingredient operations in Oceania, Sri Lanka, the Middle East and Africa.
Another element of the transaction that could potentially increase the total sale price by another NZ$375 million is the license for Bega Cheese-branded products. Currently held by Fonterra’s Australian business, the inclusion of this license in the sale depends on the resolution of a dispute with Bega Cheese Limited.
Despite this sale, Fonterra plans to continue providing the divested businesses with milk and other products via long-term agreements. This ensures that dairy brands like Anchor and Mainland will continue to incorporate New Zealand farmers’ milk in their products.
Fonterra chairman Peter McBride affirmed the board’s confidence in the transaction, stating that after an extremely competitive sale process involving multiple bidders, they believe the sale to Lactalis offers the highest value option for the cooperative. This decision was influenced not only by the strong valuation of the businesses being sold, but also by the opportunity for a full divestment of the assets and a quicker return of capital to the co-op’s owners, compared to an Initial Public Offering (IPO).
Several bidders, including Japan’s Meiji and a consortium of the ASX-listed Bega Group and Dutch dairy cooperative FrieslandCampina, had previously shown interest in the businesses.
Lactalis, an owner of popular brands such as Pauls, Vaalia, Oak and President, received clearance from the Australian Consumer and Competition Commission (ACCC) for the deal last month. Lactalis CEO Emmanuel Besnier expressed that this acquisition will strengthen the company’s strategy across Oceania, Southeast Asia, and the Middle East.
The sale is anticipated to be finalized in the first half of next year, subject to the satisfaction of all conditions. Fonterra will hold a special meeting in late October or early November to seek farmer shareholder approval for the deal.
Fonterra’s earnings guidance for FY25 remains unchanged, despite the sale.
What businesses are included in the sale?
The sale includes Fonterra’s global consumer business (excluding Greater China), several consumer brands and integrated foodservice and ingredient operations in Oceania, Sri Lanka, the Middle East and Africa.
Will Fonterra continue to supply milk to the divested businesses?
Yes, Fonterra plans to continue providing the divested businesses with milk and other products via long-term agreements.
When is the sale expected to be finalized?
The sale is expected to be completed in the first half of next year, subject to the satisfaction of all conditions.
