Fonterra Set to Sell Anchor and Mainland Brands Amid Industry Interest

Gyles Beckford is a Business Editor at RNZ. Follow him on Twitter @RNZBusiness or email gyles.beckford@rnz.co.nz.

Fonterra has confirmed it will sell its consumer business, including major brands like Anchor and Mainland, as the dairy giant looks to focus on its core business and maximize value for shareholders.

The sale of the consumer business, which includes a range of products such as butter, cheese, and infant formula, is seen as a strategic move by Fonterra. The company has been working with its advisors to assess potential divestment options and has decided that a sale is in the best interests of the co-operative.

“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 Chief Executive Miles 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.”

The consumer business includes 17 manufacturing sites around the world, including three in New Zealand, as well as integrated businesses such as Fonterra Oceania and Fonterra Sri Lanka. The sale would also include famous brands like Kāpiti, Anlene, and Fernleaf.

Industry players have shown interest in the businesses in scope for divestment, with buyers looking to capitalize on the strength and potential of the consumer goods sector. However, Fonterra has not yet decided on how to sell the businesses, with options ranging from a direct sale to industry players to an initial public offering (IPO).

“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,” said Hurrell. “Farmer shareholders would vote on the final option for divestment, which would deliver a ‘significant’ capital return to them.”

The sale of the consumer business is seen as a strategic move by Fonterra, allowing the company to focus on its core business and maximize value for shareholders.

What’s at Stake

• The sale of the consumer business includes 17 manufacturing sites around the world
• The business includes famous brands like Kāpiti, Anlene, and Fernleaf
• The sale would deliver a ‘significant’ capital return to farmer shareholders
• Fonterra has not yet decided on how to sell the businesses

Why is the Sale Happening?

• Fonterra’s consumer business has been a “problem child” for a long time
• The company wants to focus on its core business, where it has delivered more success
• Selling branded consumer products is not a core strength, as evidenced by its poor performance over a prolonged period

Estimated Value of the Sale

• Estimated value of the sale: $2.5-$3.5 billion

Next Steps

• Fonterra will work with its advisors to finalize the divestment plans
• Farmer shareholders will vote on the final option for divestment
• The company aims to maximize value for shareholders and focus on its core business

Fonterra’s decision to sell its consumer business is seen as a strategic move by the company, allowing it to focus on its core business and maximize value for shareholders. With industry players showing interest in the businesses in scope for divestment, the sale is expected to deliver a significant capital return to farmer shareholders.