Lactalis Acquires Fonterra’s Mainland Group for $2.23 Billion

Lactalis has finalized an agreement to acquire Fonterra’s Mainland Group, which encompasses the cooperative’s consumer and associated businesses, for NZ$3.845 billion (approximately US$2.23 billion). This deal could increase by NZ$375 million, potentially reaching NZ$4.2 billion (around US$2.44 billion) if it includes the Bega cheese manufacturing licenses held by Fonterra’s Australian operations.

Peter McBride, chairman of Fonterra, emphasized that Lactalis’ offer was “the highest value option” among multiple bidders. The Mainland Group comprises Fonterra’s global consumer business—excluding operations in Greater China—along with its integrated Foodservice and Ingredients sectors in Oceania, Sri Lanka, and the Middle East and Africa Foodservice business.

As part of the sale, Fonterra will continue supplying milk and related products to the businesses being divested, ensuring that New Zealand farmers’ milk remains integral to Anchor and Mainland branded goods.

Regulatory Approvals and Shareholder Vote

The acquisition is contingent upon regulatory approvals from various authorities including New Zealand’s Overseas Investment Office, Australia’s Foreign Investment Review Board, and competition regulators in several countries, including Kuwait, New Caledonia, and Saudi Arabia. Lactalis has already received informal clearance from the Australian competition authority this summer.

Following the completion of this transaction, Fonterra aims to execute a tax-free capital return of NZ$2.00 per share, amounting to NZ$3.2 billion. This return is anticipated to occur in the first half of 2026. A special meeting for farmer shareholders is scheduled for late October or early November to vote on the proposal.

Statements from Executives

Emmanuel Besnier, CEO of Lactalis, expressed that this acquisition significantly strengthens the company’s strategy across Oceania, Southeast Asia, and the Middle East. He stated, “Combining the Fonterra consumer business operations and market-leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets. I’m delighted to become a key partner to Fonterra over the long term and look forward to welcoming new teams to the Lactalis family.”

Fonterra’s CEO Miles Hurrell added that Lactalis, being the world’s largest dairy company, possesses the scale needed to elevate these brands and businesses. He noted, “Fonterra farmers will continue to benefit from their success, with Lactalis becoming one of our most significant Ingredients customers.”

Hurrell also indicated that divesting these businesses will enable Fonterra to focus on its core strengths in the Ingredients and Foodservice sectors, which service over 100 countries from New Zealand.

He reiterated the cooperative’s previously stated targets, including an average Return on Capital of 10-12%, and affirmed that the FY25 earnings guidance of 65-75 cents per share remains unchanged. The FY26 earnings guidance will be revealed in September 2025.

This acquisition marks a pivotal moment for both Lactalis and Fonterra, as they navigate the competitive landscape of the global dairy market while focusing on their respective growth strategies.