Fonterra will sell its global consumer brands, including Anchor and Mainland, and associated businesses to French dairy giant Lactalis for $3.845 billion.
Last year, the announcement of the move to sell off some of its supermarket mainstays was described as the “most dramatic major structural change” in history of the business.
In a statement released today, Fonterra Co-operative Group Ltd said the sale was subject to shareholder and regulatory approvals expected in October or November, and was expected to be completed in the first half of 2026.
Fonterra has agreed to sell its Consumer and associated businesses, including Mainland and Anchor, to French dairy giant Lactalis for $3.845 billion. Source: 1News (Source: Other)
“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,” it said.
The inclusion of the Bega licences held by Fonterra’s Australian business would be confirmed once a dispute with Bega Cheese Limited was resolved.
As part of the sale agreement, Fonterra will continue to supply milk and other products to the divested businesses, meaning New Zealand farmers’ milk would still be found in dairy brands including Anchor and Mainland.
It said it would target a tax free capital return of $2 dollars per share, which was approximately $3.2 billion, following completion of the sale.
Fonterra Chairman Peter McBride said the Board had thoroughly tested the terms and value of both a trade sale and initial public offering (IPO) as divestment options over the past 15 months.
“Following a highly competitive sale process with multiple interested bidders, the Fonterra Board is confident a sale to Lactalis is the highest value option for the Co-op, including over the long-term,” he said.
“Alongside a strong valuation for the businesses being divested, the sale allows for a full divestment of the assets by Fonterra, and a faster return of capital to the Co-op’s owners, when compared with an IPO.”
Fonterra chief executive Miles Hurrell said the sale agreement was a great outcome for the co-op.
“As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level. Fonterra farmers will continue to benefit from their success, with Lactalis to become one of our most significant ingredients customers.”
The divestment is also conditional on separation of the businesses from Fonterra and no material adverse change arising before completion.
Fonterra to sell consumer businesses for $3.8 billion – watch on TVNZ+
Fonterra will now seek farmer shareholder approval to divest the businesses by ordinary resolution at a special meeting to be held in late October or early November.
“Fonterra’s previously announced FY25 earnings guidance of 65-75 cents per share remains unchanged and our FY26 earnings guidance will be announced as part of the FY25 Annual Results in September 2025,” said Hurrell.
“The Co-op expects its FY26 earnings per share to be presented on a continuing operations basis and exclude the performance of the Consumer and associated businesses during the pre-completion period.”
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.
