Fonterra has successfully settled its disagreement with the Bega Group over Bega licenses in Australia. This settlement followed Fonterra’s decision to divest its consumer business to Lactalis, a French dairy conglomerate.
Just last week, Fonterra, headquartered in New Zealand, decided to offload its consumer and related businesses to Lactalis in a deal worth NZ$3.845 billion ($3.46 billion). These businesses house popular brands like Mainland, Anchor, and Perfect Italiano, and they currently hold the licenses for Bega Cheese-branded products within Australia.
Fonterra had originally planned to include the Bega licenses in its divestment. However, this necessitated the resolution of an ongoing legal dispute with the Bega Group.
In a recent development, both parties reached a consensus that the deal would not have any impact on the terms of their license agreements. They also agreed to put an end to the legal proceedings.
Fonterra clarified in a statement that the “sale to Lactalis of Fonterra’s global consumer and related businesses does not constitute a change of control under the Bega licenses.”
Bega reciprocated in its own statement, “Fonterra intends to structure the sale to Lactalis in a way which will not affect the operation of the Trade Mark License Agreements or trigger the change of control clauses within those agreements.”
Bega Group also asserted its anticipation for collaboration with Fonterra and Lactalis during the transition period and beyond. It confirmed that the sale to Lactalis would not modify the current contractual arrangements linked with the Bega brand or the benefits the Bega Group gains from such arrangements.
As a consequence of the resolution, the Bega licenses held by Fonterra’s Australian business will be incorporated into the divestment.
As previously declared, Lactalis will provide Fonterra an extra NZ$375 million for the licenses on top of the NZ$3.845 billion base enterprise value. This pushes the total proceeds from the sale to NZ$4.22 billion.
In earlier developments, Bega had presented a bid for Fonterra’s consumer business as part of a consortium with Dutch dairy cooperative FrieslandCampina. Japan’s Meiji was also a contender in the auction.
What was the dispute between Fonterra and Bega about?
The dispute was regarding Bega licenses in Australia that Fonterra intended to include in its divestment to Lactalis.
What resolution was reached between Fonterra and Bega?
Both companies agreed that the sale of Fonterra’s businesses to Lactalis would not affect their existing license agreements.
What is the financial value of the Fonterra-Lactalis deal?
Lactalis will pay Fonterra a total of NZ$4.22 billion, which includes the base enterprise value of NZ$3.845 billion and an additional NZ$375 million for the Bega licenses.
