Dairy deal: Fonterra agrees sale of consumer and associated businesses to Lactalis for NZ$3.845B

Fonterra Co-operative Group has announced the sale of its global Consumer and associated businesses to Lactalis, a global dairy leader, for a total enterprise value of NZ$3.845 billion (US$2.24 billion). This move aligns with Fonterra’s strategy to focus on its world-leading Ingredients and Foodservice businesses, which continue to generate significant value for its farmer shareholders.

The transaction is subject to various conditions, including approval by Fonterra’s farmer shareholders, the separation of the divested businesses from the Co-op, and necessary regulatory approvals in several jurisdictions. A Special Meeting to vote on the sale will be held later this year.

The sale includes Fonterra’s global Consumer business (excluding Greater China) and its Consumer brands, along with its integrated Foodservice and Ingredients businesses in Oceania, Sri Lanka, the Middle East, and Africa.

The transaction is anticipated to close by the first half of 2026.

Dairy supplies

As part of the deal, Fonterra will continue supplying milk and dairy ingredients to Lactalis, ensuring that its dairy brands such as Anchor and Mainland still feature New Zealand farmers’ milk. 

Lactalis will now become one of Fonterra’s key ingredients customers, further solidifying the Co-op’s place in the global dairy supply chain.

Fonterra Chairman Peter McBride says: “After a highly competitive sale process with multiple interested parties, we are confident that a sale to Lactalis provides the highest value for the Co-op. The sale also allows for faster capital return to Fonterra’s shareholders than an IPO would.” 

Lactalis CEO Emmanuel Besnier adds: “This acquisition will strengthen our strategic footprint across Oceania, Southeast Asia, and the Middle East. By combining Fonterra’s market-leading brands with our existing network in these regions, Lactalis will be able to accelerate its growth and enhance its position in key global markets.”

Fonterra’s decision to pursue this divestment is rooted in a thorough strategic review, which confirmed that the Co-op’s future value creation is best driven by its Ingredients and Foodservice businesses. CEO Miles Hurrell says: “By focusing on our core strengths in Ingredients and Foodservice, we can continue to deliver value for our farmer shareholders, with the goal of driving an average Return on Capital of 10-12%.”

Fonterra’s earnings guidance for FY25 remains unchanged, with an expected earnings range of 65-75 cents per share. The Co-op will announce FY26 earnings guidance following the completion of its FY25 Annual Results in September 2025.