Fonterra has advanced its plan to divest its global Consumer business, including Fonterra Oceania and Sri Lanka. It is considering a trade sale and an Initial Public Offering (IPO), for which it has introduced Mainland Group as the potential corporate brand.

The strategic move aims to concentrate the dairy giant’s efforts on its core Foodservice and Ingredients sectors while dairy brands like Anchor, Mainland, and Western Star grow under new ownership, expanding global markets for New Zealand dairy.

The updat follows Fonterra’s previous announcement to divest the business fully or partially to prioritize its dairy ingredients production.

CEO Miles Hurrell says the decision is based on creating the “most value for farmers today and wher there’s further room for growth.”

“We are clear on our strategy and have a pathway to grow further value for farmer shareholders and the New Zealand economy through our innovative Foodservice and Ingredients businesses.”

Assessing divestment strategies

Fonterra announced in November last year that it is pursuing both a trade sale and IPO as potential divestment options.

“Our intention is to thoroughly test the terms and value of both a trade sale and IPO before selecing an option to put to farmer shareholders for a vote,” says Hurrell.

The company is currently engaging with potential buyers, and IPO preparations are underway. It has selected Mainland Group as a corporate brand for public listing.

“The Mainland brand has strong New Zealand dairy heritage and is also well known by consumers in New Zealand, Australia and across many of our global markets,” he adds.

The company has appointed René Dedoncker and Paul Victor as the CEO-elect and CFO-elect, respectively, for Mainland Group. Dedoncker is Fonterra’s managing director of global markets, Consumer and Foodservice, and Victor has joined Fonterra from global manufacturing firm Incitec Pivot.

Fonterra’s roadshow meetings with potential investor groups will commence in March, the company emphasizes. The focus will be on “maximizing long-term value for farmer shareholders, including the best return on capital invested.” 

“Fonterra continues to target a significant capital return to be made to farmer shareholders and unit holders following the divestment.”

Last year, the New Zealand dairy cooperative invested NZ$150 million (US$92.9 million) in a UHT cream plant in Southland to meet the rising consumer demand through its foodservice business.

“Demand for UHT cream continues to strengthen. Globally, we’re expecting demand to increase by more than 4% year\-on-year between 2023-2032,” Hurrell said at the time.