Analysis milk
New Zealanders keep asking questions about Lactalis deal
Now that Fonterra's members have approved the sale of the so-called Mainland Group to Lactalis, the debate in New Zealand should be over. However, that's not the case. The reasons are Fonterra's significant importance to the New Zealand economy and the uncertainty surrounding what was actually sold and given away.
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About sales It has been reported that Fonterra has sold its consumer products and several brands (three larger ones, including Mainland, and several smaller ones) to Lactalis, but in reality, the sale involves much more. All operations in Australia and Sri Lanka have also been sold to the French dairy giant. This also includes the sale of sixteen to eighteen sites, including three in New Zealand itself.
Cheaper staff
Some people only began to consider what this could mean for Fonterra and the New Zealand economy when they read a plan from Lactalis that the company wants to transfer 4.300 New Zealand employees to Lactalis Australia's workforce. Lactalis already had its own division there. The fear now is that Lactalis wants to manage the relatively expensive New Zealand staff from Australia and eventually replace them with much cheaper Australian staff (who may also come from elsewhere). The full details of the deal are unknown because the parties have not provided full disclosure.
Around valorization
Another concern is that Fonterra has shot itself in the foot by selling several of its supposedly less profitable New Zealand businesses to the French. It is now less able to ensure the full valorization of its product and has become dependent on Lactalis. The long-term milk supply agreements with Lactalis also don't help. It's argued that Fonterra has lost control over its milk supply.
Clouded view
It's not just politicians who are opposing the deal with Lactalis; more or less ordinary New Zealanders and dairy experts are also critical. They believe Fonterra members have allowed a one-time super bonus to cloud their vision. The sale of the Mainland Group will generate NZ$4,2 billion, of which members will receive $2 per share (€0,98) tax-free. The average Fonterra member owns approximately 150.000 shares.
Reliability Lactalis
Concerns aren't limited to whether Fonterra's management, and the members who followed in their wake, made a well-considered decision. Several comments also cast doubt on the French company's reliability. Lactalis has a long history of fines for violations of the law in Italy, Spain, France itself, and even Australia. Will Lactalis truly honor its commitments to the New Zealanders?