Fonterra and Nestlé have agreed on the sale of their Dairy Partners Americas Brazil joint venture to French dairy company Lactalis for BRL$700 million – about $210m.
The deal is expected to be completed by mid-2023, subject to regulatory authority approvals.
Fonterra chief executive Miles Hurrell said the sale of Dairy Partners Americas (DPA) Brazil is aligned with the co-op’s strategy of prioritising its New Zealand milk pool.
“DPA Brazil has reached maturity as an investment for us, and the sale allows us to prioritise our resources to the businesses that are core to our strategy.”
Hurrell said that Fonterra is pleased to have secured the sale, which was delayed due to market conditions related to covid-19.
DPA Brazil has been held for sale in Fonterra’s financial statements since January 2020.
Fonterra and Nestlé created DPA in 2003 to manufacture and commercialise dairy products throughout Latin America. In 2014, the joint venture refocused its activities on Brazil and chilled dairy.
Fonterra holds a 51% stake and Nestlé 49%. DPA operates two plants and employs 1300 people. Nestlé, Chamyto, Ninho, Chandelle, Chambinho, Neston and Molico are among the well-known brands marketed by DPA in Brazil.
The sale is subject to receipt of regulatory approvals from competition authorities. Fonterra’s previously announced FY23 earnings guidance will continue to reflect the underlying performance of the DPA Brazil business during the pre-completion period.
Fonterra will provide an update on the overall impact of its divestment programme as part of its FY23 financial reporting.
