FrieslandCampina, in partnership with investment firm Pacific Equity Partners (PEP), has made a bid to acquire some or all of New Zealand-based Fonterra’s Australian operations. The bids are said to be due by the end of 2023, according to dairy industry sources quoted by The Australian. The Weekly Times also reported that FrieslandCampina and France’s Lactalis remain key candidates in the race for a takeover.
FrieslandCampina refuses to comment
It’s not easy to tell whether the rumors are true. Given the changes FrieslandCampina has made in recent years, a potential takeover doesn’t seem very likely. The company is focused on downsizing rather than expanding into new markets. On the other hand, FrieslandCampina has been operating in Australia for years through a joint venture, as agrarheute.com points out.
FrieslandCampina declined to confirm or deny the information.
“As FrieslandCampina, we never respond to speculation or rumours,” spokeswoman Eline Leenaarts told The DairyNews.
Initial information about the planned sale of Fonterra's plants in Australia has been known since September 2020, and the listing of the plants for sale was widely reported in the media in May this year. The sale process is expected to begin by the end of this year.
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Canadian company Saputo and Australian firm Bega are also potential bidders for Fonterra’s Australian unit, although these companies could face regulatory hurdles due to competition laws, The DairyNews reports.
Big changes in the Australian milk market
Fonterra Australia operates eight dairies in Victoria and Tasmania, employing about 1600 people and collecting about 1.4 billion litres of milk a year from hundreds of Australian farmers. The potential sale has raised concerns among milk suppliers who fear Fonterra’s withdrawal could reduce competition among processors, potentially affecting milk prices.
The reason for the sale was the lower profitability of the Australian plants compared to the plants in New Zealand.
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