Fonterra Co-operative Group has decided to proceed with a sale process for its global consumer business, as well as integrated businesses Fonterra Oceania and Fonterra Sri Lanka, after exploring potential divestment options following a strategic review concluded in May.
The co-op said streamlining its goals to areas of the most value and headroom for growth will encourage greater results for its farmer shareholders and unit holders, even with the divestment. It released its revised strategy in September, revealing plans focused on the ingredients and foodservice sectors, which were found to fit this criteria best.
Fonterra CEO, Miles Hurrell, said following a detailed scoping phase, the co-op has decided to proceed with a sale process for the aforementioned businesses.
“Since our announcement in May 2024, we have been working with our team of advisors to assess potential divestment options, the assets and businesses in scope, and the best pathway to maximise value for our co-op,” said Hurrell.
“This work, coupled with the confidence we have in our revised strategic direction, has confirmed a divestment of our global Consumer and associated businesses is in the best interests of the co-op.
“We have received meaningful buyer interest in the businesses in scope for divestment, which is testament to their strength and potential.
“Through the scoping phase, we have assessed both a trade sale and IPO as attractive divestment options and will now prepare for a sale process which will pursue both options,” he said.
Advisors have been selected to assist in managing this process. Fonterra said it will provide updates over the coming months as this programme of work progresses, and continues to target a significant capital return to be made to farmer shareholders and unit holders following the divestment.
“We will thoroughly test the terms and value of both a trade sale and IPO with the market before seeking support from farmer shareholders for a divestment option through a vote,” said Hurrell.
“A final decision on which divestment pathway to pursue will be based on several factors, including which option will result in optimal long-term value for the co-op.”
After the strategy release, Fonterra announced some leadership changes in October. Former Fonterra alumni, Matt Bolger, will return to the co-op and step into the managing director co-operative affairs position from March 2025. Current managing director co-operative affairs, Mike Cronin, is leading the potential consumer divestment process, and will be dedicating his focus to this project full time after passing on the role.
