After months of speculation, Fonterra  revealed last week it has agreed to sell its consumer and associated businesses to multinational dairy giant Lactalis. Included is Fonterra’s global consumer business and brands, the integrated foodservice and ingredients businesses in Oceania and Sri Lanka as well as the Middle East and Africa Foodservice business.

Fonterra is targeting a tax free capital return of NZ$2.00 dollars per share with Lactalis paying NZ$4.22bn, NZ$375m of which is the Bega licences held by Fonterra Australia. A statement to NZX following the announcement of the sale, clarified that Bega and Fonterra had resolved the dispute regarding the licences and that they were included in the sale.

The sale is subject to certain conditions, including farmer shareholder approval, regulatory approval and separation of the businesses. Following the sale, Fonterra will supply milk and other products to the divested businesses under long-term agreements. 

Regulatory approvals are necessary from the Overseas Investment Office in New Zealand and the Foreign Investment Review Board in Australia. The Australian Competition and Consumer Commission (ACCC) indicated it will not oppose Lactalis’ acquisition of Fonterra’s consumer, dairy ingredients and food service businesses.