Fonterra Moves Forward with Divestment Plan to Focus on Sri Lanka Core Business
By: Staff Writer
November 12, Colombo (LNW): Fonterra Co-operative Group Ltd has announced its decision to move forward with the divestment of its global Consumer business, alongside its integrated operations in Fonterra Oceania and Fonterra Sri Lanka. CEO Miles Hurrell outlined the company’s plan to streamline its operations, focusing more sharply on its core business of dairy ingredients and foodservice. This decision comes after an in-depth strategic review and a thorough scoping phase initiated in May 2024.
“We have been working closely with our advisors to assess all possible divestment options and determine the best course of action to maximize value for the Co-op,” said Hurrell. “Given our new strategic direction, we believe that selling our global Consumer business and associated operations aligns with our goals and will support a more focused and high-performing Fonterra.”
The Co-op is particularly looking to strengthen its position as a global leader in dairy ingredients by prioritizing its Ingredients and Foodservice divisions. Fonterra’s extensive portfolio of dairy products, including well-known brands like Anchor, Mainland, and Anlene, will no longer be at the center of its operations. Instead, the company aims to concentrate on supplying high-quality dairy ingredients to B2B markets, an area where it sees significant growth potential.
Fonterra has already received strong interest from potential buyers, signaling the strength and value of the businesses it is seeking to divest. The company is considering both a trade sale and an Initial Public Offering (IPO) as possible options for selling these assets. Hurrell emphasized that Fonterra would rigorously test both pathways to ensure the best possible return for the Co-op and its shareholders before proceeding with any final decision.
“We will engage with the market to evaluate the value of both options, and we will consult with our farmer shareholders through a vote before moving forward,” said Hurrell. “Our primary focus is to secure long-term value for the Co-op, ensuring that any divestment decision will contribute positively to our strategic goals.”
The divestment process is expected to take between 12 and 18 months. Fonterra’s goal is to generate significant capital returns for its farmer shareholders and unit holders following the sale of these non-core assets.
Chairman Peter McBride reinforced that the decision to divest aligns with Fonterra’s commitment to its core mission: to collect milk sustainably, process it efficiently, and deliver high-value dairy products to customers. “This is a strategic move to deepen Fonterra’s focus on dairy nutrition and ingredients, which will enhance our ability to generate value for our stakeholders,” McBride said.
With this shift in focus, Fonterra aims to create a simpler, more efficient Co-op that is better positioned to navigate the global dairy market. By reducing its exposure to consumer-facing operations, the company hopes to unlock greater value from its core business and invest more in its high-performing Ingredients and Foodservice segments.
In the coming months, Fonterra will provide updates as the divestment process unfolds, with a clear objective to secure the best possible outcome for the future of the Co-op and its members.
