(Reuters) -New Zealand's Fonterra Co-operative Group will sell its global consumer and associated businesses to French dairy major Lactalis for NZ$3.845 billion ($2.24 billion), the company said on Friday.
The sale includes Fonterra's global consumer business, encompassing the operations of brands such as Mainland and Anchor butter, Kapiti ice cream and cheese and the Anlene powdered milk supplement.
The transaction also covers the dairy company's Foodservice and Ingredients businesses in Oceania and Sri
Lanka, along with its Middle East and Africa Foodservice operations.
In November, Fonterra had announced a dual-track plan to either sell the units or list them through an initial public offering (IPO) to refocus on its core activity of processing milk domestically.
Sources told Reuters in May that several companies, including Japan's Meiji, Canada's Saputo and Lactalis, were mulling bids for the units. U.S. private equity firm Warburg Pincus was also among the interested parties.
Fonterra Chairman Peter McBride said in a statement on Friday that the company had "thoroughly tested" the terms and value of both a trade sale and an IPO over the past 15 months.
"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," he added.
Fonterra said the deal value could potentially increase by NZ$375 million if the Bega licences held by its Australian business are included.
The company is targeting a tax-free capital return of NZ$2 per share following the sale's completion.
The deal, subject to approval from Fonterra's farmer shareholders and regulatory authorities, is expected to close in the first half of 2026.
Australia's competition watchdog has already said it would not oppose any potential bid by Lactalis after concluding an informal probe into the deal.
($1 = 1.7197 New Zealand dollars)
(Reporting by Himanshi Akhand in Bengaluru; Editing by Mohammed Safi Shamsi)
