Fonterra and Nestlé Sale of JV to Lactalis

This strategic move allows Fonterra to leverage the proceeds to offset the debt associated with the divested business, resulting in minimal cash impact on Fonterra's earnings. However, a negative foreign currency translation reserve (FCTR) balance of approximately $70 million, tied to Fonterra's ownership of the DPA Brazil asset, will be reflected as a non-cash accounting reclassification in Fonterra's profit and loss statement.

Under the joint venture, Fonterra held a 51% stake, while Nestlé held the remaining 49%. Fonterra CEO Miles Hurrell emphasizes that the sale aligns with the co-op's decision to focus on its New Zealand milk pool. With the regulatory approvals now secured, Hurrell notes that the divestiture enables Fonterra to prioritize resources for businesses integral to its strategic objectives.