Fonterra discussed how plans are progressing to divest from the B2C business
Source: The DairyNews
Two months after Fonterra announced its plans to divest its consumer brands and operations in Australia and Sri Lanka, the company is nearing the selection of professional advisers. Investment banks, legal firms, and accountancy groups have submitted their proposals, with appointments expected to be announced shortly.
Mike Cronin, Fonterra’s Managing Director of Co-operative Affairs, explained the complexity of the divestment process, which is expected to span 12 to 18 months. The initial phase involved assembling an internal team from the mergers and acquisitions and legal departments to conduct a scoping study, assessing the feasibility of selling various assets and business units.
"This preparatory work is crucial to ensure a structured and effective divestment process," said Cronin. Following this phase, Fonterra will seek board approval to proceed with the second phase, which includes drafting information memoranda and soliciting expressions of interest from potential buyers.
The comprehensive due diligence covers all aspects of the divested entities, including employment and commercial contracts, intellectual property, and trademarks. "It's about understanding the intricacies of what we're selling and ensuring we meet regulatory requirements and gain shareholder approval," Cronin added.
The divestment is part of Fonterra’s broader strategy to refocus on its core business-to-business operations, emphasizing improved milk production and innovation. The company is committed to updating its strategy up to 2030, highlighting the aspects of the business that will remain post-divestment.
As the process unfolds, Fonterra intends to maintain transparent communication with its farmers and stakeholders, ensuring they are informed about significant developments without overwhelming them with premature details.
"This divestment marks a strategic pivot to concentrate on what Fonterra does best, enhancing efficiencies and innovation within our more focused portfolio," Cronin concluded.
The outcome of these divestments will also be closely monitored by regulatory bodies and industry stakeholders in both Australia and Sri Lanka, given the significant role Fonterra plays in these markets.
"This preparatory work is crucial to ensure a structured and effective divestment process," said Cronin. Following this phase, Fonterra will seek board approval to proceed with the second phase, which includes drafting information memoranda and soliciting expressions of interest from potential buyers.
The comprehensive due diligence covers all aspects of the divested entities, including employment and commercial contracts, intellectual property, and trademarks. "It's about understanding the intricacies of what we're selling and ensuring we meet regulatory requirements and gain shareholder approval," Cronin added.
The divestment is part of Fonterra’s broader strategy to refocus on its core business-to-business operations, emphasizing improved milk production and innovation. The company is committed to updating its strategy up to 2030, highlighting the aspects of the business that will remain post-divestment.
As the process unfolds, Fonterra intends to maintain transparent communication with its farmers and stakeholders, ensuring they are informed about significant developments without overwhelming them with premature details.
"This divestment marks a strategic pivot to concentrate on what Fonterra does best, enhancing efficiencies and innovation within our more focused portfolio," Cronin concluded.
The outcome of these divestments will also be closely monitored by regulatory bodies and industry stakeholders in both Australia and Sri Lanka, given the significant role Fonterra plays in these markets.
