Fonterra Secures Approval for $4.22 Billion Lactalis Deal

Fonterra's farmer shareholders have overwhelmingly approved the Co-operative's decision to sell its global Consumer and associated businesses, Mainland Group, to Lactalis for $4.22 billion. The vote, conducted at a virtual Special Meeting, saw 88.47% of the total farmer votes cast in support of the divestment, with 80.59% participation based on milk solids voted.

Key Takeaways:

• Fonterra's farmer shareholders voted in favor of selling the Mainland Group businesses to Lactalis, with 88.47% of the total farmer votes cast in support of the divestment.
• 80.59% of the participating farmer shareholders voted, with the results being well above the required threshold of 50% to approve the sale.
• The divestment is subject to securing certain regulatory approvals and the separation of Mainland Group businesses from Fonterra, both of which are reportedly well underway.
• Fonterra is targeting a tax-free capital return of $2 per share to shareholders and unit holders, equivalent to $3.2 billion, once the sale is complete.
• A separate shareholder vote will be required for the payment of the capital return through a scheme of arrangement under Part 15 of the Companies Act 1993.
• The process for the capital return is expected to be detailed by Fonterra in early December.
• Chairman Peter McBride acknowledged the level of engagement from farmer shareholders in the lead-up to the vote, highlighting the Co-op's unique ability to involve farmers in strategic decisions.

Statistics:

• 88.47% of the total farmer votes cast in support of the divestment to Lactalis.
• 80.59% participation based on milk solids voted.
• $4.22 billion: The sale price of the Mainland Group businesses to Lactalis.
• $3.2 billion: The targeted tax-free capital return equivalent to $2 per share.
• 2026 calendar year: The expected completion date of the divestment, subject to regulatory approvals.

Sources:

• Fonterra Co-operative Group press release