28 May 2014
FONTERRA AND NESTLÉ REALIGN LATIN AMERICAN JOINT VENTURE
Fonterra and Nestlé have realigned their 10-year old Dairy Partners Americas (DPA) 50/50 joint venture and signed binding agreements covering the revised scope of the partnership.
Under these agreements, signed today in Sao Paulo, Brazil:
• Fonterra will take a 51 per cent controlling stake in DPA Brazil, with Nestlé holding the balance. • Fonterra and its local partner will acquire Nestlé’s share of DPA Venezuela, and will continue to operate the business as a joint venture. • Fonterra will sell its share in DPA’s milk powder manufacturing business to Nestlé. • Nestlé will buy Fonterra’s share in Ecuador.
The DPA Brazil business will become focussed primarily on chilled dairy products, sold under Nestlé brands.
Fonterra’s CEO, Theo Spierings, says the DPA joint venture has performed well for ten years and the time is now right to realign the partnership to better reflect the respective strategies of Nestlé and Fonterra in the region.
He says the revised alliance supports Fonterra’s group strategic focus on everyday nutrition in key growth markets such as Latin America, China and Indonesia.
“We value our relationship with Nestlé and this high-quality agreement will see our successful alliance continue.
“The deal also enables the Co-operative to drive more long-term value for its farmers and investors,” he says.
Fonterra’s Managing Director of Latin America, Alex Turnbull, says: “The region’s economies have undergone considerable change during the past 10 years. We’ve seen increased prosperity in markets like Brazil with rapid urban growth and a focus on healthy nutrition driving demand for dairy products.
“A bigger stake in DPA Brazil means we will be extremely well placed to drive our volume and value growth strategy focusing on everyday nutrition offerings.”
Fonterra’s Latin American footprint drives more than 900,000 metric tonnes of volume per year and $3.5 billion (NZD) in revenue from consumer dairy, foodservice and high value ingredients.
“We are very proud with what we’ve achieved through the DPA alliance with Nestlé and look forward to continuing to work together with renewed focus,” says Mr Turnbull.
The changes to the joint venture are subject to regulatory approval, and other customary Fonterra Co-operative Group
conditions. The parties are anticipating completion of the transactions by the end of 2014.
Fonterra expects to receive a net cash payment of about $96 million (NZD) from the interrelated transactions.
About Dairy Partners Americas
Set up in 2003, Dairy Partners Americas is the largest dairy company in South America, purchasing and processing more than two billion litres of milk each year in Brazil alone. DPA produces ingredients and consumer products with strong brands in the liquid and chilled dairy market throughout Latin America.
Fonterra licences brands and provides its large-scale milk procurement, product development, and manufacturing and processing expertise, as well as technical services and certain technology to the alliance.
Nestlé licences brands and provides its product development, manufacturing and processing expertise, as well as distribution infrastructure to the alliance.
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For further information contact: Fonterra Communications Phone: +64 21 507 072
About Fonterra Fonterra is a global leader in dairy nutrition – the preferred supplier of dairy ingredients to many of the world’s leading food companies. Fonterra is also a market leader with our own consumer dairy brands in Australia/New Zealand, Asia/Africa, Middle East and Latin America.
The farmer-owned New Zealand co-operative is the largest processor of milk in the world, producing more than two million tonnes of dairy ingredients, value added dairy ingredients, specialty ingredients and consumer products every year. Drawing on generations of dairy expertise, Fonterra is one of the largest investors in dairy based research and innovation in the world. Our more than 16,000 staff work across the dairy spectrum from advising farmers on sustainable farming and milk production, to ensuring we live up to exacting quality standards and delivering every day on our customer promise in more than 100 markets around the world.
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