New Zealand-based dairy company Fonterra Co-operative Group is selling its Australian yogurt and dairy dessert business to Parmalat Australia.
In this regard, both companies entered into negotiations which resulted in signingof the sale agreement. The transaction, which is subject to regulatory approvals, is slated to be completed in the first half of 2016.
The sale will include Fonterra's Australian yogurt and dairy desserts business which is inclusive of production sites at Tamar Valley and Echuca, along with its Australian yogurt and dairy dessert brands. The divestment is intended to restore the profitability of the Australian business.
The divestment is being considered as a pivotal part of the company's Australian plan. Recently, the company has announced several changes which it said were a result of a strategic plan to revive the company's Australian business in order to deliver better returns to farmer shareholders.
Fonterra CEO Theo Spierings said: "We are focusing on areas where we can win in a highly competitive market, and that means optimising our product mix and streamlining operations to match, and investing in higher value add products that will deliver the best returns for our farmer shareholders and unit holders.
"Australia is our largest milk pool outside New Zealand, and is an integral part of our multi-hub strategy. Our Australian operations have particular ingredient strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses. As a key part of our multi-hub strategy, we are matching these strengths with the opportunities across our 100 markets."
Fonterra managing director Oceania Judith Swales said: "Divesting the yoghurt and dairy desserts business will allow us to focus on what we do best, so we can continue delivering a competitive milk price to our suppliers, benefits to our customers, innovative dairy foods to our consumers, and improved returns to our farmer shareholders and unit holders."
Recently, the company announced AUD120m ($87m) investment to renovate its Stanhope factory in northern Victoria, which is a cheese manufacturing facility. The investment will help expand the production capacity by 50%. Fonterra also sold its 9% stake in Bega, to redirect the funds into Stanhope factory redevelopment.
