Lactalis has purchased Fonterra Co-operative Group's global consumer and associated businesses for NZD 3.845 billion.
Fonterra Co-operative Group Ltd has announced it has agreed the sale of its global Consumer and associated businesses to Lactalis for NZD 3.845 billion, subject to certain customary financial adjustments and conditions, including approval by farmer shareholders, separating the businesses being sold from Fonterra, and receipt of certain final regulatory approvals.
The sale comprises Fonterra’s global Consumer business (excluding Greater China) and Consumer brands; the integrated Foodservice and Ingredients businesses in Oceania and Sri Lanka; and the Middle East and Africa Foodservice business.
In addition to the base enterprise value of NZD 3.845 billion, there is potential for a further NZD 375 million increase from the inclusion of the Bega licences held by Fonterra’s Australian business, which, if progressed, would take the headline enterprise value of the transaction up to NZD 4.220 billion.
As part of the sale agreement, Fonterra will continue to supply milk and other products to the divested businesses, meaning New Zealand farmers’ milk will still be found in iconic dairy brands including Anchor and Mainland.
Fonterra Chairman Peter McBride said over the last 15 months, the Board has thoroughly tested the terms and value of both a trade sale and initial public offering (IPO) as divestment options.
“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. 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,” said McBride.
“This, coupled with 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 CEO Miles Hurrell said the sale agreement represents a great outcome for the Co-op.
“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,” said Hurrell.
“At the same time, a divestment of these businesses will allow Fonterra to deliver further value for farmer shareholders and New Zealand by focusing on our world-leading Ingredients and Foodservice businesses, through which we sell innovative products to more than 100 countries around the world, from our home base here in New Zealand.”
Lactalis CEO Emmanuel Besnier this acquisition has significantly strengthened its 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. I'm delighted to become a key partner to Fonterra over the long term, and I'm looking forward to welcoming new teams to the Lactalis family.”
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