Thursday, 19 November 2015 10:17

Fonterra exits US joint venture

Written by 

Fonterra will sell its 50% interest in DairiConcepts, the co-op's US joint venture with Dairy Farmers of America (DFA).

DFA will purchase Fonterra's 50% interest on 31 December 2015 for a price of approximately $196 million (subject to foreign exchange conversion adjustments and customary closing adjustments).

The DairiConcepts partnership was established in 2000 when Fonterra contributed its US dairy/cheese flavours business and DFA contributed a number of cheese and cheese-powder assets.

Fonterra chief executive Theo Spierings says the transaction did not impact the longstanding relationship with DFA. Fonterra and DFA were both founding members of the Global Dairy Platform and had a shared interest in promoting the growth in global dairy consumption and the further development of cooperative dairy farming. Fonterra had decided to exit the partnership as it was considered to be a non-core component of its strategy.

"We still value our relationship with DFA, however, as the DairiConcepts business is almost completely stand-alone operationally, we have agreed that it would be simpler for one of the partners to buy the other out.

"The US remains a key part of our global multi-hub strategy and this divestment does not prevent Fonterra from exploring new growth opportunities for this milk pool.

"A long-term supply agreement we have reached as part of the sale, means our US milk pool will continue to meet value add customer demand through our NZMP brand."

 

More like this

Light reading

In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s financial state and loudly sharing their dismay in the Koru club, another of the Hound’s spies has passed on more news in the ‘Fonterra director watch’ category.

 
 

» Latest Print Issues Online

Milking It

Toxic loan?

More questions are being asked about the Government’s contentious $10 million loan to Westland.

Moo love on the net

Cows and bulls searching for ‘moo love’ now have a mobile app to help their breeders.

 
 

» Connect with Dairy News