Fonterra has sold its nine per cent shareholding in fellow dairy company Bega Cheese to free up capital for more strategic investments.
Fonterra bought the shareholding, which is now worth almost $78 million, at the time of the bidding war for Warrnambool Cheese and Butter between Bega, Murray Goulburn and Saputo in 2013.
“We're focused on investing in higher value-add dairy products that deliver the best returns for our shareholders," Fonterra chief financial officer Lukas Paravicini said of the sale.
“Releasing capital, such as through this sale, for future growth is the best use of our shareholders’ funds.”
Fonterra also said the sale of its shareholding has “no implications for its long-standing relationship with Bega”, which includes a license on the Bega brand and a supply contract for cheese.
“The Bega brand has an important role in our cheese portfolio where we are a market leader, and we will continue to build on our relationship with Bega, which goes back more than a decade,” Paravicini said.
Bega is also looking to new horizons through a partnership with Blackmores to develop and manufacture a range of nutritional foods, including high-quality infant formula.
“We are aware from our presence in the Asia region that there is significant demand for infant formula and we believe that, with the combination of Blackmores and Bega, we’re uniquely positioned to support those women unable to breastfeed,” the company said.
The products will contain premium ingredients and will be sold to Australian and Asian customers through Bega’s subsidiary Tatura, and will be available early next year.
The Australian Competition and Consumer Commission (ACCC), meanwhile, has proposed to re-authorise an agreement that prohibits the advertising and promotion of infant formula by manufacturers and importers directly to the public, and governs their interactions with health care professionals.
The Infant Nutrition Council’s Marketing in Australia of Infant Formula Agreement (MAIF Agreement), is a voluntary, self-regulatory code which governs the marketing of infant formula for infants up to 12 months. It has been authorised since 1992.
