Fonterra to sell its Australian yoghurt and dairy dessert business

Fonterra has announced its intention to sell its Australian yoghurt and dairy dessert business to Parmalat Australia.

Both parties entered into exclusive negotiations which have now culminated in the signing of a sale agreement. The transaction is expected to be completed in the first half the of the 2016 calendar year.

The divestment of its Australian yoghurt and dairy desserts business is part of Fonterra’s comprehensive plan to return the Co-operative’s Australian business to strong and sustainable profitability. As part of these plans, Fonterra recently has announced a A$120 million investment to rebuild its factory in Stanhope, in northern Victoria, as a state-of-the-art primary cheese manufacturing plant, with 50% extra capacity. The company has also divested its 9% stake in Bega, with the funds being re-invested into the Stanhope cheese plant. In addition, Fonterra has commissioned a multi-million dollar beverages plant at its Cobden facility, in western Victoria, to service a 10 year partnership with Woolworths. Also, the company has launched its largest global brand, Anchor, in Australia.

Changes to transform Fonterra’s Australian business

Chief Executive Theo Spierings said these changes were the result of driving a clear strategic plan to transform the Australian business to deliver stronger returns to farmer shareholders and unit holders.

Mr Spierings said, “We are focusing on areas where we can win in a highly competitive market, and that means optimising our product mix and streamlining operations to match, and investing in higher value add products that will deliver the best returns for our farmer shareholders and unit holders.

“Australia is our largest milk pool outside New Zealand, and is an integral part of our multi-hub strategy. Our Australian operations have particular ingredient strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses. As a key part of our multi-hub strategy, we are matching these strengths with the opportunities across our 100 markets.”

All Fonterra’s Echuca and Tamar Valley employees in the yoghurt and dairy dessert business have received offers of employment from Parmalat.