Fonterra Cooperative Group [NZX:FCG] and Nestle are overhauling their Latin American 50/50 joint venture, with the New Zealand dairy exporter getting the liquids business and the Swiss group buying the milk processing plants.
New Zealand's biggest company will take a 51 percent stake in Dairy Partners Americas Brazil, which will continue to commercialise chilled dairy products, while Fonterra and a local partner will take Nestlé's share of DPA Venezuela, Fonterra said in a statement.
Fonterra will sell its share in the DPA milk powder manufacturing businesses and DPA Ecuador to Nestle, the world's biggest food group, and expects to receive $96 million in the next financial year.
"We've seen increased prosperity in markets like Brazil with rapid urban growth and a focus on healthy nutrition driving demand for dairy products," Fonterra managing director Latin America Alex Turnbull said. "A bigger stake in DPA Brazil means we will be well-placed to drive our volume and value growth strategy focusing on everyday nutrition offerings."
Fonterra, which is scheduled to update its forecast payout to farmer shareholders today, produces more than 900,000 metric tonnes of dairy products per year, with some $3.5 billion in revenue from consumer dairy, food service and dairy ingredients, it said.
The tweak to the decade-long agreement is subject to regulatory approval.
Units in the Fonterra Shareholders' Fund, which gives investors exposure to the group's dividends, rose 1.4 percent to $6 yesterday, and have gained 3.5 percent this year.
Swiss-listed Nestle's shares slipped 0.4 percent to 69.55 Swiss francs, and have advanced 7 percent this year.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Gareth Morgan's sizeable donations to his own party revealed
- Kiwi business traveller stranded in San Francisco after United de-planes his wallet and passport
- Budget 2017: What's been announced so far, what's tipped for today
- SeaDragon confirms full-year loss will widen
- Chorus increases bank facility, pushes out maturity date for increased flexibility, certainty
Most listened to
- David Seymour gives Gareth Morgan a serve as the latest political party donations are disclosed
- Those pre-budget announcements aren’t as big as they look. Joyce still has lots of fiscal room, says Rob Hosking
- Tony Falkenstein claims to have NZX shareholder support for his bid to become a director
- Pacific Edge CEO David Darling on progress with key US customers
- NBR Radio: best of the week ended May 19, with Grant Walker