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Fonterra farmers cash in after deal with Lactalis
Fonterra's consumer business has been definitively sold to Lactalis. This puts an end to much speculation surrounding the deal, in which FrieslandCampina was also frequently mentioned as a potential buyer. Lactalis paid over 3,8 New Zealand dollars, which at the current exchange rate equates to €1,92 billion. Fonterra members will receive a generous share of the profits.
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Fonterra has been selling its consumer business for some time and has previously considered an IPO. In addition to the consumer division (excluding China), Fonterra is also selling its foodservice operations in Oceania, Sri Lanka, and the Middle East and Africa to Lactalis. Fonterra intends to continue focusing on high-quality (basic) dairy products and ingredients with high added value.
Milk continues to come from Fonterra
The agreement is subject to several conditions. For example, Fonterra members still need to approve the sale, which is expected to take place at the end of October. Whether this will pose an obstacle remains to be seen, as members will participate directly in the sale and receive $2 per share tax-free. On average, a Fonterra member holds approximately 150.000 shares.
In the deal, Fonterra has negotiated a supply contract, meaning Lactalis will continue to purchase milk and ingredients from them for the time being. This means that consumer products in New Zealand supermarkets will continue to be made from Fonterra's own milk. Fonterra's consumer division consumed approximately 2024% of the milk supply in 15 and generated around 20% of its profits at that time.
More focus
The CEOs of both companies are delighted. Miles Hurrell of Fonterra says this divestment will allow the company to better focus on its ingredients business, which will further benefit member value creation in the long term. Lactalis CEO Emmanuel Besnier says his company will gain a stronger position in Oceania, Southeast Asia, and the Middle East.
The transaction is expected to close in the first half of 2026. The competition authorities, among others, still need to approve it. The Australian regulator has already indicated in the run-up to the deal that it sees no obstacles. The value could rise to $4,22 billion if the Bega licenses from Fonterra's Australian branch are also transferred to Lactalis. Due to a dispute between Fonterra and Bega, this has not yet happened.
Big price jump
A maximum of 10% of the approximately 1,6 billion issued Fonterra shares are available on the stock exchange in the non-farmer investment fund. The share price has risen recently. increased considerably and after the acquisition news was announced, it jumped again significantly to over $6 per share. A year ago around this time, the share price was hovering around $3,50.