Dairy giants eye Fonterra’s Australian operations

Fonterra boss Rene Dedoncker says he does “not see Australia being split up” as part of the company’s divestment process.

Fonterra’s Australian operations are unlikely to be broken up in a factory fire sale, its head honcho says, as the NZ processor seeks to exit Australia.

Last month, Fonterra’s NZ management announced it was selling its Australian consumer, food service and ingredients business as well as its NZ brands in a new unit called Fonterra Oceania.

Market analysts say Fonterra is likely to net at least $NZ2bn for the consumer, food service and ingredients business — with a portfolio of factories including Cobden, Stanhope and Darnum in Victoria.

Fonterra Oceania managing director Rene Dedoncker said he did not envisage factories such as Stanhope or Tasmania’s Wynyard being sold off individually.

The Australia-based dairy boss did not name specific suitors for the company, with the divestment process set to roll into 2025.

“In terms of the divestment process, it’ll take 12 to 18 months, milk security is fundamental as part of that and our farmers are in good place,” Mr Dedoncker said.

“Fonterra Australia is now part of Fonterra Oceania and Fonterra Oceania is up for divestment in full, along with five other businesses. So there are six consumer businesses in total around the world, of which Oceania is one.

“Now, the actual execution, it could be full or partial divestment — not of the individual businesses, we do not see Australia being split up.

“But it could be that Fonterra Oceania finds a home separate to other businesses. So partial meaning the six businesses — they could be individually viewed, they won’t be individually broken up. Our proposition is we’re selling Fonterra Oceania.”

Industry insiders say Dutch dairy giant Friesland-Campina and French lactose colossus Lactalis are in the running for Fonterra’s Australian operations but both had to clear foreign investment hurdles to gain a foothold Down Under.