Wednesday, 20 March 2019 08:59

Fonterra to exit European joint venture

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Fonterra will use money from sale of assets to reduce debt. Fonterra will use money from sale of assets to reduce debt.

Fonterra is pulling out of a European joint venture as part of its portfolio review following last year’s disastrous financial results.

The co-op says the third asset it has identified in its portfolio review is DFE Pharma, a 50/50 joint venture established in 2006 between Fonterra and FrieslandCampina. The co-op is also looking at selling Tip Top Ice Cream and its stake in Chinese business Beingmate. 

DFE Pharma is one of the largest suppliers of pharmaceutical excipients which are used as a carrier agent in medicines such as tablets and powder inhalers.

Fonterra chief executive Miles Hurrell says Fonterra has let FrieslandCampina know that it has started a sales process for our 50% share of DFE Pharma.

“At the same time, we have confirmed that we are committed to maintaining our lactose service and supply agreements from Fonterra’s Kapuni operation in Taranaki and supporting the ongoing operations of the DFE Pharma business.

“Together with our partner, we have grown DFE Pharma from relatively small beginnings into a significant and successful business. While continuing to perform well, ownership of DFE is not core to our strategy.”

In addition to this sales process, the co-op says it has received strong interest in Tip Top and is actively considering its options for its shareholding in Beingmate.

The co-op will use money from sale of assets to reduce debt.

“We are well on track to meet our target to reduce end of year debt by $800 million,” says Hurrell.

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