The sale of dairy giant Fonterra's global consumer businesses, which includes household name brands such as Anchor and Mainland, has taken a potentially significant step forward.
The Australian Competition and Consumer Commission (ACCC) has cleared French company Lactalis to buy the Fonterra consumer business after deciding it didn't have competition concerns regarding the operations of the businesses in Australia.
Lactalis, styled as the world's biggest dairy company (with revenues of €28.3 billion) is on the acquisition trail and recently completed a US$1.2 billion acquisition of yoghurt businesses in the United States.
Fonterra has been running a 'dual-track' sales process for the businesses, which have been named Mainland Group and is seeking to sell them either as a trade sale or through an initial public offering (IPO) and stock market listing of the shares.
Early indications - though not from Fonterra itself - were that Fonterra's shareholder farmers may get a windfall of as much as $3 billion for a total sale of the assets.
Fonterra itself has said only that it "continues to target a significant capital return to be made to farmer shareholders and unit holders following the divestment".
A 'roadshow' was undertaken earlier this year to highlight the for-sale assets to investors.
The roadshow materials showed the assets up for sale made revenues of $4.9 billion in the 2024 financial year, up from $4.7 billion the year before. Earnings before interest and tax (EBIT) were $200 million in the 2024 financial year.
The announcement from the ACCC doesn't necessarily man that Lactalis is buying the businesses - but as far as the Australian authorities are concerned it can, so, it's a key obstacle overcome. There would however, be significant interest from other parties too.
Lactalis and Fonterra both currently acquire raw milk from dairy farmers in Victoria and Tasmania, as well as processing and supplying a range of dairy products across Australia.
“We looked very closely at the transaction as it will combine two of the largest buyers of raw milk in Victoria and lead to some further consolidation in Tasmania,” ACCC Deputy Chair Mick Keogh said.
“While we acknowledge the concerns raised by some representative bodies, after careful consideration we have determined that the acquisition is unlikely to result in a substantial lessening of competition.”
Lactalis is a French multinational dairy group based in Laval, France. Lactalis business activities include acquiring raw milk from farmers and processing it into dairy products and ingredients for domestic consumption and export. In Australia, it owns a range of brands such as Pauls, Vaalia, Oak, Président and Lactalis Foodservice.
The ACCC said while it has reviewed the proposed acquisition of Fonterra’s consumer, dairy ingredients and food service businesses by Lactalis, this is not an indication that Lactalis’ bid will ultimately be accepted by the target business.
"Whether Fonterra will ultimately accept Lactalis’ bid is a matter for Fonterra," the ACCC said.
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