Dairy giant Fonterra Co-operative Group has decided to proceed with the divestiture of its global consumer business and integrated businesses Fonterra Oceania and Fonterra Sri Lanka.
CEO of the New Zealand-based group, Miles Hurrell added that the company assessed potential divestment options, the assets and the businesses in scope, and the best way to maximise the value of the co-operative.
Hurrell added, “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.”
As part of the revised strategy, Fonterra will prioritise its foodservice and ingredients business to improve its performance.
'Meaningful Buyer Interest'
Hurrell stated that the group has received "meaningful buyer interest" for the businesses it aims to offload.
“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 added.
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Fonterra has selected advisors to manage the sale of the businesses.
The dairy giant will test both trade sale and IPO options before seeking support from farmer shareholders for a divestment option through a vote.
“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,” Hurrell stated.
The company increased its fiscal 2024 earnings and farmgate milk price forecasts, citing strengthening demand for reference commodity products from key importing regions.
