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New Zealand dairy giant Fonterra has sold its New Zealand Milk (Mexico) subsidiary to Sigma Alimentos, the food division of Mexican industrial conglomerate ALFA.

The sale, at an undisclosed price, is subject to regulatory approvals from Mexican competition authorities.

Fonterra chief executive Andrew Ferrier said New Zealand Milk had entered the Mexican market almost a decade ago, under the auspices of the New Zealand Dairy Board, and made a subsequent acquisition. However, he added that maintaining that presence no longer made strategic sense.

“New Zealand Milk (Mexico) was in the wrong market segment, and its size was neither niche enough to be effective, nor big enough to be a real market presence.

“Our best option was to sell the business. The recent move to consolidation in the Mexican market, towards fewer and bigger players in the cheese segment, meant the timing was right to complete the sale,” Ferrier added.

There will be no impact on Fonterra’s Mexican ingredients business, which is not part of the sale of New Zealand Milk (Mexico).