Fonterra shaves 50c off forecast milk price
Fonterra has dropped its forecast milk price mid-point by 50c as a surge in global milk production is putting downward pressure on commodity prices.
The co-operative also plans to appeal a ruling by the New South Wales Supreme Court on a case around Fonterra’s proposed divestment plan and its impact on a licencing agreement with Bega.
Fonterra argued that provisions of its licensing agreement with Bega are not impacted by the proposed divestment process. However, Bega, a potential bidder for Fonterra’s Oceania business, opposed Fonterra’s submission.
Bega Cheese issued a statement saying the NSW Supreme Court dismissed Fonterra’s proceedings and ordered the co-op to pay costs and it welcomed the decision.
In a statement, Fonterra’s managing director mergers & acquisitions and strategic divestments, Mike Cronin, says that the court “stated it is unable to make a determination at this stage, as there is not yet enough certainty about the outcome of the divestment process”.
“Our view has not changed as a result of the court decision and Fonterra intends to appeal this decision in the coming weeks.
“This does not change our divestment plans, and we continue to pursue both a trade sale and initial public offering (IPO) as potential divestment options.”
Fonterra’s Oceania business, which includes iconic Anchor, Mainland and Western Star brands, is attracting bidders. French company Lactalis and Bega Cheese are among them.
Bega executive chairman Barry Irvin says the company will always fight to protect its rights.
“We hope to work constructively with Fonterra Group on the sale of its Oceania business of which Bega Group is a natural acquirer and remains very interested in.”
Fonterra’s divestment plan includes either the sale of float of Fonterra Oceania and Fonterra Sri Lanka, which has 17 manufacturing sites around the world, including three in New Zealand.
