Dairy giant Fonterra has come to an agreement with Parmalat Australia for the sale of its Australian yoghurt and desserts businesses and its manufacturing sites at Tamar Valley and Echuca.
According to Fonterra’s ASX Announcement, the sale agreement was inked yesterday and the sale is part of the company’s “comprehensive plan to return the Co-operative’s Australian business to strong and sustainable profitability.”
“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,” said Chief Executive Theo Spierings.
“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.”
The deal, which is conditional on regulatory and other approvals, is expected to be completed in the first half of 2016.
Most recently Fonterra announced an A$120 million investment to rebuild its factory in Stanhope, Victoria, as a state-of-the-art primary cheese manufacturing plant.
Further, the company commissioned a multi-million beverages plant at its Cobden facility in Victoria to service its decade long partnership with Woolworths and divested its 9% in Bega.
Fonterra also launched its largest global brand Anchor in Australia.
“We will continue investing in programs and innovation that supports our market leading brands in key retail categories, including Western Star butter and Perfect Italiano, Mainland and Bega cheeses, Anchor cream and fresh milk,” added Fonterra Managing Director Oceania Judith Swales.
“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.”
Fonterra also added that all of its Echuca and Tamar Valley employees have been offered a position by Parmalat.