New Zealand’s 80-year-old ice cream company Tip Top has been sold by Fonterra to Nestlé and R&R JV, Froneri, for NZ$380 million (US$250.2 million). Fonterra CEO Miles Hurrell said the sale was "bittersweet".
“This came through in both the number and quality of bids we received. It’s a fantastic brand and as a result, we’ve secured a good price for our farmers and unit holders.
“One of the big attractions for Froneri is the fact that Tip Top and Kāpiti ice cream both use fresh milk and cream, from New Zealand grass-fed cows. We’ve signed an agreement with the new owners to supply milk which ensures that Fonterra farmers will continue to be part of the Tip Top story,” Hurrell said.
Fonterra bought Tip Top as part of its purchase of Peter and Browne's Foods Business in 2001. The sale was a NZ$100 million above book value, which would have a positive six cents per share impact on earnings, Fonterra said.
The sale was floated by Fonterra chairman John Monaghan in December 2018 when he said the company was looking at its ongoing ownership and had appointed First NZ Capital Limited as an external adviser to consider a range of options.
“It’s been a privilege being the guardians of Tip Top, but it’s time to hand the baton to new owners. The well-loved brand needs continuing investment and focused ownership to be sustainable for generations to come. It’s not something we’re in a position to do right now,” Hurrell said on 13 May.
Nestlé and R&R created Froneri in April 2016. It was a joint venture in ice cream, frozen food and chilled dairy. Private equity firm PAI Partners owns R&R. It bought Australia’s Peters Ice Cream from Pacific Equity Partners for more than $400m about five years ago.
Froneri is the third largest ice cream manufacturer in the world, selling a staple of well-known ice cream brands in 20 countries. Froneri CEO Ibrahim Najafi says the Tip Top name and its operations, including the Auckland based factory site at Mount Wellington will be maintained.
“We have always admired Tip Top as New Zealand’s favourite and most trusted ice cream brand. The acquisition enhances our scale and supports our vision to build the world’s best ice cream company,” he said.
“We have always admired Tip Top, which is an iconic brand in New Zealand with a long proud history and we are looking forward to welcoming the team into Froneri. Our vision is to build the world’s best ice cream company; an important part of our strategy is to develop local market successes and roll them out across our other markets,”
The agreed settlement date is 31 May 2019.