French dairy giant Lactalis has successfully secured the acquisition of the consumer-facing assets of New Zealand-headquartered Fonterra.
Lactalis confirmed the deal in a statement today (22 August) following an official approach in May. This transaction is contingent upon the approval of Fonterra’s farmer shareholders and competition regulators.
Fonterra subsequently issued its statement, disclosing a price tag of NZ$3.8bn ($2.2bn) for the acquisition.
This transaction encompasses Fonterra’s global consumer dairy business, excluding Greater China, along with well-known brands such as Mainland, Anchor, and Perfect Italiano. Additionally, it includes Fonterra’s foodservice and ingredients businesses in Oceania and Sri Lanka, plus the Middle East and Africa out-of-home operations.
As a result of this deal, approximately 4,300 employees will transition to Lactalis’ operations in Australia.
In May 2024, Fonterra announced its intention to divest consumer-facing segments to concentrate on ingredients, marking a “step-change in strategic direction”.
Furthermore, the Australian Competition and Consumer Commission (ACCC) confirmed in May that it had received a proposal from Lactalis to acquire Fonterra’s global consumer business and its dairy and ingredients foodservice units in Australia.
Speculation had surrounded other potential bidders, including Canada-based dairy major Saputo, Japan’s Meiji Holding Co., and US investment company Warburg Pincus, although none of these claims were confirmed.
Separately, Australia’s Bega Group announced in June its plans to seek “informal merger clearance” from the ACCC for a potential acquisition of Fonterra’s Oceania business unit.
The Fonterra board opted for a sale after evaluating both a disposal and IPO as viable options based on terms and value.
Fonterra chairman Peter McBride stated: “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 enables a full divestment of assets by Fonterra, resulting in a quicker return of capital to the co-op’s owners when compared to an IPO.”
Additionally, the deal’s value could increase by NZ$375m if the Bega production licenses currently held by Fonterra’s Australian business are included, pending approval from the Australian group. If the licenses are omitted, Fonterra expects to receive a fair value payment from Bega, to be determined later.
Fonterra aims to deliver a tax-free capital return of NZ$2.00 per share, totaling approximately NZ$3.2bn, upon the sale’s completion.
According to Lactalis, this acquisition significantly strengthens its strategy across Oceania, Southeast Asia, and the Middle East. Emmanuel Besnier, chairman of Lactalis, remarked: “Combining the Fonterra consumer business operations and market-leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets.”
Under the disposal agreement, Fonterra will continue to supply milk and other products to the divested businesses.
The transaction involves the sale of shares in Mainland Group Holdings, a company established by Fonterra to house the assets up for sale.
Fonterra indicated that this deal requires shareholder approval and regulatory clearances from New Zealand’s Overseas Investment Office, Australia’s Foreign Investment Review Board, and competition and foreign-investment regulators in countries like Kuwait, New Caledonia, and Saudi Arabia.
In July 2025, the ACCC confirmed it would not oppose Lactalis’ proposed acquisition in Australia.
Fonterra will also seek farmer shareholder approval through an ordinary resolution at a special meeting scheduled for late October or early November. Pending all necessary approvals, the deal is anticipated to finalize in the first half of 2026.
Fonterra CEO Miles Hurrell commented: “As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level. At the same time, a divestment of these businesses will allow Fonterra to deliver further value for farmer shareholders and New Zealand by focusing on our world-leading ingredients and foodservice businesses, through which we sell innovative products to over 100 countries around the globe.”
