Fonterra farmers approve NZ$4.22 billion consumer business sale to Lactalis

Fonterra Co-operative’s farmer shareholders have approved the sale of the company's global consumer and associated businesses, including the Mainland Group, to French dairy giant Lactalis for NZ$4.22 billion (US$2.48 billion).  

In a virtual special meeting held on October 30, 88.47% of farmer votes supported the divestment, with 80.59% participation based on milk solids voted, exceeding the 50% threshold required for approval. The strong mandate follows extensive consultation with farmer shareholders since the divestment exploration began in May 2024.

“The divestment will usher in an exciting new phase for the co-op,” says Peter McBride, chairman at Fonterra. “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.”

McBride says the board had carefully weighed the co-operative’s strategic direction and core strengths before recommending the sale. He praised the high level of engagement throughout the process, noting that the vote demonstrates one of the key things that sets Fonterra apart from most other processors. 

“Our farmers have a direct say in the future of their co-operative, and they’ve made the most of that opportunity,” he says.

The transaction’s completion remains contingent on securing regulatory approvals and separating the Mainland Group business from Fonterra’s operations, with both processes currently underway. 

Fonterra expects to finalize the deal in the first half of 2026. Upon completion, the co-operative is targeting a tax-free capital return of NZ$2 (US$1.17) per share to shareholders and unit holders, totaling approximately NZ$3.2 billion (US$1.88 billion).

This distribution will require an additional shareholder vote and is expected to proceed via a scheme of arrangement under Part 15 of the Companies Act 1993. Fonterra plans to provide detailed information on the timing and process for the capital return in early December. 

The divestment marks a pivotal moment for New Zealand’s largest dairy exporter as it streamlines operations to focus on its core competencies in the global dairy market.