Fonterra farmers approve consumer sale with strong support

NEW ZEALAND – Fonterra’s farmer shareholders have given the go ahead for the Co-operative to sell its global Consumer and associated businesses, Mainland Group, to Lactalis for $4.22 billion, with 88.47% of the total farmer votes cast in support of the divestment.

Chairman Peter McBride said the Board and management team were encouraged by the level of engagement from farmer shareholders in the lead-up to the vote.

“We’ve been pleased to see so many farmers joining in the discussions since the start of this process in May last year when we first announced the decision to explore divestment options, and especially over the past month or so when the full details have been available,” said Mr McBride.

“We’re pleased to have received a strong mandate, with 88.47% of the total farmer votes cast in support of the recommendation and 80.59% participation based on milk solids voted. We want to thank all farmer shareholders who voted.”

The threshold required to approve the sale was for more than 50% of the votes from those entitled to vote (based on share-backed kgMS) and who actually voted in favour of the proposal.

Completion of the divestment remains subject to securing certain regulatory approvals and the separation of Mainland Group business from Fonterra, both of which are well underway.

Subject to these steps being completed, Fonterra expects the transaction to complete in the first half of the 2026 calendar year.

Fonterra is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to $3.2 billion, once the sale is complete.

Another shareholder vote will be required for the payment of the capital return. The process for that capital return is expected to be by way of a scheme of arrangement under Part 15 of the Companies Act 1993.

The Co-op plans to provide more details on the timing and process for the capital return in early December.

Lactalis to acquire Fonterra’s Consumer & Associated Businesses for US$2.25 B

Recently, Fonterra agreed to sell its Consumer and associated businesses to Lactalis for NZD 3.845 billion (US$2.245 billion).

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 $3.845 billion, there is potential for a further $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 $4.220 billion.

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