Copyright farmersweekly
Reading Time: 3 minutes Ooverwhelming support from Fonterra shareholders and a high voter turnout have delivered a “really strong, resounding mandate” to proceed with the sale of its global consumer and associated businesses, Mainland Group, to Lactalis, Fonterra chair Peter McBride says. An 88.47% majority of the co-operative’s shareholders voted in favour of the sale, which will see this part of the co-operative’s business sell for $4.22 billion. The vote saw 80.59% of shareholders participate, based on milk solids voted. The final votes on the divestment were cast at a virtual special meeting on Thursday. McBride told Farmers Weekly that Fonterra management was pleased to have received a strong mandate for the sale and he was very satisfied with the result. “Any turnout over 75% of shareholders on a resolution like that is a really strong, resounding mandate.” It showed that Fonterra shareholders cared about the future of the business. They were highly engaged and farmers had taken the time to be well informed on the topic, he said. Looking back on the past 18 months since the divestment process was first publicly mooted, he said it had been a journey where the idea had morphed and evolved. Huge effort had been put in by the co-operative’s senior management team to get to where it is today, he said. “It’s been a huge amount of work and there’s still a huge amount of work to do in terms of the separation of the business.” McBride said the decision to divest the Mainland Group businesses is significant, and the board had not taken it 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.” Regulations required that more than 50% of shareholders vote yes in order for the sale to proceed. Completion of the divestment remains subject to securing regulatory approvals and the separation of the Mainland Group business from Fonterra, both of which are well underway. The approvals include getting the nod from the Overseas Investment Office and the Financial Investment Review Board in Australia. The sale has already received approval from the Australian Competition and Consumer Commission. Subject to these steps being completed, Fonterra expects the transaction to complete in the first half of the 2026 calendar year. Fonterra is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to $3.2bn, once the sale is complete. Another shareholder vote will be required for the payment of the capital return with more detail on the timing and process for the capital return due in early December. McBride said this briefing will be separate from Fonterra’s annual meeting, scheduled for that same month. At today’s meeting McBride, CEO Miles Hurrell and Co-operative Council chair John Stevenson gave one final pitch to farmers. McBride thanked farmers for their engagement through the sale process. “Following a highly competitive sale process with multiple interested bidders, your board is confident that a sale to Lactalis is the highest value option for the co-operative including over the long term.” He acknowledged the emotional connection many had to the brands and said many may mourn their change of ownership. “But it is a fantastic deal, where the co-op gains more than just $4.2bn.” It would usher in an exciting new phase for the co-op, he said. He also acknowledged the risks that came with the deal. The supply agreement with Lactalis is not exclusive and there is a risk that in time, Lactalis may chose a different supplier. However, “customer loyalty cannot be written into a contract forever – it’s earned.” Farmers Weekly Poll
