NZ’s big dairy co-op Fonterra has sold its Soprole business in Chile for $1.055 bn. It rounds off a significant week for the dairy industry.
Fonterra announced in April it would divest the company in order to focus on NZ milk. It also was looking to sell off a stake in its Australian business but subsequently decided not to go ahead, a fortuitous decision in light of the shortages of home-grown milk products in that market.
“We are now at the end of the divestment process and have agreed to sell Soprole to Gloria Foods, a consumer dairy market leader in Peru,” Fonterra CEO Miles Hurrell said.
Soprole is a very good business but does not rely on NZ milk or expertise, he added.
Gloria Foods is a consumer dairy market leader in Peru, with operations in Bolivia, Puerto Rico, Argentina, Colombia and Uruguay. Fonterra and Gloria Foods have a long-standing commercial relationship in South America.
Divestment is subject to a number of conditions such as regulatory approvals.
“Fonterra remains committed to targeting a significant capital return to our shareholders and unitholders.
“The Fonterra Board intends to make a final decision on the amount and timing of any capital return once the sale agreement is unconditional, cash proceeds are received in NZ and having regard to other relevant factors including Fonterra’s debt and earnings outlook at such time.”
Hurrell says that Fonterra has a long history in Chile and is pleased to have reached agreement with Gloria Foods, which also has a proud dairy history in South America. “Fonterra is delighted to pass on the Soprole business to a committed new owner with a strong regional focus on growth. Soprole’s success over many years and its market-leading position across a number of dairy categories in Chile, has been built on the dedicated focus of Soprole’s management team and staff, and the support of its supplying farmers”.
Fonterra’s previously announced FY23 earnings guidance will continue to reflect only the underlying performance of the Soprole business during the pre-completion period. Fonterra will provide an update on the overall impact of its divestment programme as part of its FY23 financial reporting.