The disclosure of the divestment plan from Fonterra came just three months after the announcement of the merger between Fonterra Brands New Zealand and Fonterra Australia to create Fonterra Oceania.
Fonterra Cooperative Group, a Kiwi dairy supplier, is planning to exit Australia as it explores options for divesting its global consumer business and integrated businesses Fonterra Oceania and Fonterra Sri Lanka. This strategic shift is aimed at focusing on being a B2B dairy nutrition provider, generating value through ingredients and food service channels.
The global consumer business of Fonterra includes well-known brands such as Anchor, Fernleaf, Kāpiti, Mainland, Perfect Italiano, and Western Star. Fonterra Oceania encompasses consumer, foodservice, and ingredients businesses, while Fonterra Sri Lanka includes consumer and foodservice operations.
In the first half of FY2024, the businesses earmarked for potential divestment demonstrated strong performance, utilizing 15% of the co-op’s total milk solids and contributing 19% of Fonterra’s operating earnings. CEO Miles Hurrell emphasized that divesting these assets will lead to a simpler and more high-performing organization, allowing a new owner to unlock the full potential of the consumer and associated businesses.
To facilitate the divestment process, Fonterra will engage advisors, anticipating a timeframe of 12 to 18 months due to the scale and shareholder support required. Concurrent with the divestment announcement, Global Markets CEO Judith Swales will resign from her position, effective July 31, aligning with the cooperative’s strategic shift.
Fonterra remains committed to its long-term strategy, Our Path to 2030, with plans to provide further updates on growth strategies and measures for long-term value creation. The cooperative also announced the termination of its on-market share buyback program, originally scheduled to run until August 13.
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