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Fonterra says its remains committed to targeting “a significant” capital return to shareholders and unit holders next financial year.
The co-operative board will make a final decision on the amount and timing of any capital return once the sale agreement of its Chilean business Soprole is unconditional and cash proceeds are received in New Zealand.
The board will also consider “other relevant factors” including Fonterra’s debt and earnings outlook at such time.
Fonterra announced in November that it was offloading Soprole to Gloria Foods, a transaction that will result in aggregate consideration (sale price and future payments) of over $1 billion.
The sale is subject a number of regulatory approvals.
Today Fonterra chief executive Miles Hurrell confirmed approval from the Chilean competition authority, Fiscalía Nacional Económica (FNE), has now been received.
“Completion of the sale remains subject to satisfaction of other conditions previously announced, including commencement of an irrevocable public tender offer process in Chile for the outstanding shares in Soprole not already owned by Fonterra.
“Receipt of FNE approval is a significant milestone for the transaction and we remain on track in the sale process. We will update the market on expected timing for completion of the sale as the remaining conditions are progressed,” says Hurrell.
Gloria Foods is a consumer dairy market leader in Peru, with operations in Bolivia, Puerto Rico, Argentina, Colombia and Uruguay. Fonterra and Gloria Foods have a long-standing commercial relationship in South America.
OPINION: There is zero chance that someone who joined Fonterra as a lobbyist, then served as a general manager of Fonterra's nutrient management programme, and sat on the board of Export NZ, a division of lobbyist group Business New Zealand, doesn't understand that local butter (and milk and cheese) prices are set by the international commodity price.
Kiwis love their butter, and that's great because New Zealand produces some of the best butter in the world. But when the price of butter goes up, it's tough for some, particularly when many other grocery staples have also gone up and the heat goes on co-operative Fonterra, the country's main butter maker. Here the co-op explains why butter prices are so high right now.
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