The businesses being sold include major brands such as Mainland, Anchor and also processing operations in Australia and Sri Lanka.
The sale to the French-based dairy company included a long-term agreement for Fonterra to sell milk and ingredients to Lactalis.
“As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level,” Fonterra chief executive Miles Hurrell said.
“Fonterra farmers will continue to benefit from their success, with Lactalis to become one of our most significant Ingredients customers.”
Lactalis chief executive Emmanuel Besnier said the consumer businesses would strengthen its growth strategy across Oceania, Southeast Asia and the Middle East.
“Combining the Fonterra consumer business operations and market leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets,” Besnier said
The sale included Fonterra’s global Consumer business, excluding Greater China, and its consumer brands, as well as the integrated Foodservice and Ingredients businesses in Oceania and Sri Lanka, and Foodservice business in the Middle East and Africa Foodservice business.
In addition to the base value of $3.845b, there was 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 value of the transaction to $4.22b.
The Co-op was targeting a tax-free capital return of $2.00 per share, which was about $3.2b, following completion of the sale.
The deal was expected to settle in the first half of 2026, subject to a number of conditions, including regulatory and shareholder approvals.
Fonterra said shareholders will be asked to approve the deal at special meeting to be held in late October or early November.
