Fonterra has recently disclosed the sale of its Australian assets to French dairy giant Lactalis for A$3.48 billion (US$2.32 billion), subject to shareholders approval in New Zealand.
According to Australian Dairy Farmers’ (ADF) President Ben Bennett, the Lactalis-Fonterra move will create a processing behemoth that will impact competition at the farmgate. Market players in Australia are concerned about the merger of the 2 largest milk processors in Australia which could have negative impact on prices.
To ensure price and supply stability, ADF has called for binding agreements to ensure that all current Fonterra contracts were honoured, along with guaranteed operation of key processing sites.
The US$2.3 billion sale includes all of Fonterra’s global consumer business, excluding Greater China, and its NZ consumer brands as well as its food service and ingredients businesses in Australia and Sri Lanka.
Fonterra Chief Executive Miles Hurrell mentioned that Lactalis has the scale to take Fonterra’s brands and business to the next level. Lactalis will become one of Fonterra’s most significant ingredients customers in the future.
Lactalis Chief Executive Emmanuel Besnier regarded the acquisition as a significant boost to its growth strategy in Southeast Asia, Oceania and the Middle East.
