What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Fonterra has sold its subsidiary to global ice cream company Froneri for $380 million.
The new owners will continue to use Fonterra milk to make ice cream.
Fonterra CEO Miles Hurrell confirmed the sale, saying it was a bittersweet moment for Fonterra.
“Since we took ownership of Tip Top in 2001, a lot of work has gone into ensuring it remained New Zealand’s leading ice cream company. Over that time, we’ve had strong support from New Zealanders, and I want to recognise and thank them for that.
“Tip Top has always listened to consumers and cared about their changing tastes, as well as their long-time favourites. An average of 340 serves of Tip Top are enjoyed every minute of every day.
“This came through in both the number and quality of bids we received. It’s a fantastic brand and as a result, we’ve secured a good price for our farmers and unit holders.
Hurrell says one of the big attractions for Froneri is the fact that Tip Top and Kāpiti ice cream both use fresh milk and cream, from New Zealand grass-fed cows. “We’ve signed an agreement with the new owners to supply milk which ensures that Fonterra farmers will continue to be part of the Tip Top story.
“We will also retain full global ownership of the Kāpiti brand and will be licencing its use for ice cream to Froneri. This means our popular Kāpiti cheese isn’t going anywhere.
“I get the strong connection New Zealanders have with Tip Top. It will be important for them to see that it’s in good hands.
“It’s been a privilege being the guardians of Tip Top, but it’s time to hand the baton to new owners. The well-loved brand needs continuing investment and focused ownership to be sustainable for generations to come. It’s not something we’re in a position to do right now.”
Throughout its 80-year history, Tip Top has been owned by several international brands and today’s announcement is the next chapter.
Froneri is the third largest ice cream manufacturer in the world, selling a staple of well-known ice cream brands in 20 countries. Froneri brings leadership and global expertise in ice cream, reach into new ice cream markets, and new consumer products.
Froneri CEO Ibrahim Najafi says the Tip Top name and its operations, including the Auckland based factory site at Mount Wellington will be maintained.
“We have always admired Tip Top as New Zealand’s favourite and most trusted ice cream brand. The acquisition enhances our scale and supports our vision to build the world’s best ice cream company.”
The agreed settlement date is 31 May 2019. While there will be a transition period over a number of months, it will be very much business as usual, and Tip Top employees will transfer across to become part of Froneri.
