French dairy giant Lactalis has come up trumps in sealing the acquisition of the consuming-facing assets of New Zealand-headquartered Fonterra.
Confirming the deal in a statement today (22 August) following an official approach in May, Lactalis said the transaction is subject to the approval of the Fonterra dairy cooperative’s farmer shareholders and competition regulators.
Fonterra, meanwhile, issued its own statement, putting a price tag on the acquisition of NZ$3.8bn ($2.2bn).
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The transaction includes Fonterra’s global consumer dairy business, excluding Greater China, and brands such as Mainland, Anchor, and Perfect Italiano. It also takes in the co-op’s foodservice and ingredients businesses in Oceania and Sri Lanka, along with the Middle East and Africa out-of-home business.
As part of the deal, 4,300 employees will join Lactalis’ operating division in Australia.
Fonterra announced in May 2024 that it planned to quit the consumer-facing parts of the business to focus on ingredients in what it called a “step-change in strategic direction”.
The Australian Competition and Consumer Commission (ACCC) announced in May it had received a proposal from Lactalis to acquire Fonterra’s global consumer business and the co-op’s dairy and ingredients foodservice businesses in Australia.
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By GlobalDataIt was also previously speculated, but never confirmed, that Canada-based dairy major Saputo, Japan’s Meiji Holding Co., and US investment company Warburg Pincus might also be interested in acquiring Fonterra’s up-for-sale businesses.
Separately, Australia’s Bega Group announced in June its intent to seek “informal merger clearance” from the ACCC for a potential acquisition of Fonterra’s Oceania business unit.
The Fonterra board opted for a sale after evaluating the terms and value of both a disposal and an IPO as potential options.
Fonterra chairman Peter McBride said today: “Following a highly competitive sale process with multiple interested bidders, the Fonterra board is confident a sale to Lactalis is the highest-value-option for the co-op, including over the long term.
“Alongside a strong valuation for the businesses being divested, the sale allows for a full divestment of the assets by Fonterra, and a faster return of capital to the co-op’s owners, when compared with an IPO.”
The deal’s value could rise by NZ$375m if the Bega production licences currently held by Fonterra’s Australian business are included, subject to approval by the Australian group, Fonterra said.
If the licences are excluded, Fonterra anticipates receiving a fair value payment from Bega, to be determined at a later date.
The co-op aims to deliver a tax-free capital return of NZ$2.00 per share, approximately NZ$3.2bn, following the sale’s completion.
According to Lactalis, the French dairy business will inherit 16 manufacturing facilities from Fonterra located in Australia, New Zealand, Sri-Lanka, Malaysia, Indonesia and Saudi Arabia.
“With this acquisition, we significantly strengthen our strategy across Oceania, South East Asia and the Middle East. Combining the Fonterra consumer business operations and market leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets,” Emmanuel Besnier, the chairman of Lactalis, said.
Under the disposal agreement, Fonterra will continue to supply milk and other products to the divested businesses.
The transaction involves the sale of shares in Mainland Group Holdings, which was set up by Fonterra to house the up-for-sale assets.
Fonterra said the deal requires shareholder approval and regulatory clearances from New Zealand’s Overseas Investment Office, Australia’s Foreign Investment Review Board, and competition and foreign-investment regulators in countries including Kuwait, New Caledonia, and Saudi Arabia.
In July 2025, the ACCC confirmed it would not oppose Lactalis’ proposed acquisition in Australia.
Fonterra added it will seek farmer shareholder approval through an ordinary resolution at a special meeting scheduled for late October or early November. Contingent on all approvals, the deal is expected to finalise in the first half of 2026.
Fonterra CEO Miles Hurrell said: “As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level.
“At the same time, a divestment of these businesses will allow Fonterra to deliver further value for farmer shareholders and New Zealand by focusing on our world leading ingredients and foodservice businesses, through which we sell innovative products to more than 100 countries around the world.”
