Fonterra's farmer shareholders have today voted in favour of selling its consumer businesses to French dairy giant Lactalis.
In August, Fonterra agreed to sell its major brands such as Mainland and Anchor for $3.845 billion.
The inclusion of Bega licenses held by Fonterra's Australian business brings the total proceeds for the sale of consumer and associated businesses to $4.22b.
In a statement today, Fonterra said it received a "strong mandate", with 88.47% of votes in support of the sale.
Chairman Peter McBride said the decision to divest the Mainland Group businesses is significant and one the Board did not take lightly.
“We have examined the strategic context we operate in, our strengths and how as a Co-op we create value for our farmer owners.
“The divestment will usher in an exciting new phase for the Co-op. We will be able to focus Fonterra’s energy and efforts on where we do our best work. We will have a simplified and more focused business, the value of which cannot be overstated,” says Mr McBride.
The company has described the sale as the "most dramatic major structural change" in the history of the business.
As part of the sale agreement, Fonterra would continue to supply milk and other products to the divested businesses, meaning New Zealand farmers' milk would still be found in dairy brands including Anchor and Mainland.
Fonterra said it is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to $3.2 billion, once the sale is complete.
At the time of the announcement, Fonterra chief executive Miles Hurrell said the sale allows for “a full divestment of the assets by Fonterra, and a faster return of capital to the Co-op's owners, when compared with an [initial public offering]”.
Peters slams sale
Shortly after the announcement, New Zealand First leader Winston Peters labelled the sale as “utter madness” and “economic self-sabotage”.
“This is an outrageous short-sighted sugar hit that is just giving away New Zealand’s added value to a company from a major EU country. There is now no long term security for New Zealand’s farmers,” he said.
"Three years after this deal starts, Lactalis can begin the three year notice to terminate the milk supply to these brands. Six years is meaningless for a long-term exporter. When it’s over, it really is over."
'Hysterical nonsense' - Fonterra chairman
Speaking to 1News after being asked about Peters' comments, McBride said farmers had made the decision today, which was not done lightly.
"Those comments are just hysterical nonsense to be honest," he said.
"They wouldn't have invested $4.2 billion into these businesses just to walk away from them. They need New Zealand milk... front of mind for Lactalis was security of supply, so I don't buy that rationale."
When asked about the product's milk supply staying local after the sale, McBride said "you can't guarantee that".
"But they're not going to be able to import milk successfully into New Zealand, it's going to have to be New Zealand sourced milk, so we don't see anything changing in that regard.
"Some products, like some ingredients, may change over time, but we have other demand for them as well."
He said the products would continue to be manufactured in New Zealand for the foreseeable future.
Lactalis welcomes shareholder support
Lactalis said it welcomes the support in favour of acquiring the Mainland Group assets.
"Our interest in this investment reflects our strong belief in the future of dairy and in the people and communities who bring it to life. Lactalis sees significant potential to grow in Oceania South East Asia and Middle East," it said.
"We fully respect the regulatory steps still in process and will refrain from commenting further at the time."
The sale is expected to be completed in the first half of 2026. An announcement providing more detail on the timing and process is expected for the capital return in early December.
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