Fonterra Sells Mainland and Anchor Brands to Lactalis for $3.845 Billion

Dairy cooperative Fonterra has finalized the sale of its consumer businesses, including well-known brands such as Mainland and Anchor, to the French dairy giant Lactalis for $3.845 billion. This significant transaction encompasses processing operations not only in Australia but also in Sri Lanka, marking a strategic shift for Fonterra in its global business operations.

The agreement includes a long-term contract allowing Fonterra to supply milk and ingredients to Lactalis. Miles Hurrell, chief executive of Fonterra, expressed confidence in the deal, stating, “As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level.” He emphasized that Fonterra’s farmers would continue to benefit from Lactalis’s success, with the company becoming one of Fonterra’s most significant ingredients customers.

Emmanuel Besnier, chief executive of Lactalis, highlighted the strategic benefits of the acquisition. He noted that integrating Fonterra’s consumer business operations with Lactalis’s existing presence in Australia and Asia would enhance their growth strategy across Oceania, Southeast Asia, and the Middle East. “Combining the Fonterra consumer business operations and market-leading brands with our existing footprint will allow Lactalis to further grow its position in key markets,” Besnier stated.

Details of the Transaction

The sale includes Fonterra’s global consumer business, excluding Greater China, along with its consumer brands. Additionally, it encompasses the integrated Foodservice and Ingredients businesses in Oceania and Sri Lanka, as well as the Foodservice operations in the Middle East and Africa. Beyond the base value of $3.845 billion, there exists potential for an additional $375 million increase, contingent upon the inclusion of the Bega licences held by Fonterra’s Australian operations. If this progresses, the overall value of the transaction could reach $4.22 billion.

Fonterra is targeting a tax-free capital return of $2.00 per share, amounting to approximately $3.2 billion, following the completion of the sale. The deal is anticipated to settle in the first half of 2026, pending several conditions, including regulatory and shareholder approvals.

Fonterra plans to convene a special meeting in late October or early November to seek shareholder approval for the transaction. The outcome of this meeting will be pivotal in moving forward with the sale.

This strategic divestment reflects Fonterra’s intent to streamline its operations while focusing on core areas. As the dairy industry continues to evolve, the partnership with Lactalis could provide new opportunities for both companies in the competitive global market.