Fonterra Sells Consumer Unit to Lactalis for NZ$3.8 Billion

Fonterra Co-operative Group has agreed to sell its global consumer and related businesses to France’s Lactalis Group for NZ$3.845 billion (US$2.2 billion). The price could rise by as much as NZ$375 million if licences for the Bega brand from Fonterra’s Australian operations are included in the transaction. The New Zealand dairy co-operative said it intends to use the proceeds to fund a tax-free capital return of about NZ$2.00 a share and to strengthen its balance sheet. The deal continues Fonterra’s strategic shift toward higher-margin ingredients and food-service products while reducing exposure to branded retail lines. Completion is subject to regulatory approvals in several jurisdictions. Fonterra and Lactalis did not disclose a closing date, but the companies said they are working toward finalising the transaction as soon as conditions are met.