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Battle for Fonterra parts intensifies
The battle for the Australian parts of Fonterra in particular is heating up. French dairy giant Lactalis is interested and has informed the Australian competition authority ACCC, but has not yet made an offer. Other companies are also still in the race.
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The businesses slated for divestment include Fonterra's consumer business, Australian manufacturing and Sri Lanka operations, which together could be worth around US$2,4 billion.
Whether that is a realistic estimate remains to be seen. And there is interest in the companies. In addition to Lactalis, the Australian Bega Cheese is also in the race, with the very wealthy Forrest family behind it. The Canadian Saputo and the Japanese Meiji are also still competing for the Fonterra parts. However, the first two companies seem to have the most interest.
Fonterra wants to further focus on high-quality (basic) dairy products and ingredients with high added value.
As part of Fonterra's ongoing restructuring, it was also decided last week to close the Canpac blending and packaging unit. This unit in Hamilton, New Zealand, employs 120 people and processes around 4.000 tonnes of milk powder annually. This makes it too small and inefficient. The processed volume is less than 1% of Fonterra's total production.
At its large Edendale site, Fonterra is meanwhile investing in additional electrical installations to replace old coal-fired installations.