Winston's crusade
OPINION: A short-term sugar hit. That's what NZ First leader Winston Peters is calling the proposed sale of Fonterra's consumer and associated businesses.
The world’s largest milk company Lactalis has won the bid for Fonterra’s global consumer and associated businesses.
The family-owned business will pay $3.845 billion for the assets, and the sale is subject to certain customary financial adjustments and conditions including approval by farmer shareholders, separating the businesses being sold from Fonterra, and receipt of certain final regulatory approvals.
The sale comprises Fonterra’s global Consumer business (excluding Greater China) and Consumer brands; the integrated Foodservice and Ingredients businesses in Oceania and Sri Lanka; and the Middle East and Africa Foodservice business.
In addition to the base enterprise value of $3.845 billion, there is potential for a further $375 million increase from the inclusion of the Bega licences held by Fonterra’s Australian business, which if progressed would take the headline enterprise value of the transaction up to $4.220 billion.
Fonterra’s farmer shareholders and unit holders are in for a $3.2b windfall – the co-op is targeting a tax-free capital return of $2/share, which is approximately $3.2 billion, following completion of the sale.
As part of the sale agreement, Fonterra will continue to supply milk and other products to the divested businesses, meaning New Zealand farmers’ milk will still be found in iconic dairy brands including Anchor and Mainland.
Fonterra chairman Peter McBride says over the last 15 months, the board has thoroughly tested the terms and value of both a trade sale and initial public offering (IPO) as divestment options.
“Following a highly competitive sale process with multiple interested bidders, the Fonterra board is confident a sale to Lactalis is the highest value option for the co-op, including over the long-term.
“Alongside a strong valuation for the businesses being divested, the sale allows for a full divestment of the assets by Fonterra, and a faster return of capital to the co-op’s owners, when compared with an IPO.
“This, coupled with the firm belief we have in Fonterra’s long-term strategy, gives the Board the
confidence to unanimously recommend this divestment to shareholders for approval,” says McBride.
A major feature of the Ashburton A&P Show, to be held on October 31 and November 1, will be the annual trans-Tasman Sheep Dog Trial test match, with the best heading dogs from both sides of the Tasman going head-to-head in two teams of four.
Fewer bobby calves are heading to the works this season, as more dairy farmers recognise the value of rearing calves for beef.
The key to a dairy system that generates high profit with a low emissions intensity is using low footprint feed, says Fonterra program manager on-farm excellence, Louise Cook.
Rural retailer Farmlands has reported a return to profitability, something the co-operative says shows clear progress in the second year of its five-year strategy.
According to a new report, the Safer Rides initiative, which offered farmers heavily discounted crush protection devices (CPDs) for quad bikes, has made a significant impact in raising awareness and action around farm vehicle safety.
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