Fonterra to sell 50% stake in DairiConcepts to US partner Dairy Farmers of America

By Mark ASTLEY contact

- Last updated on GMT

Fonterra to sell 50% stake in DairiConcepts to US partner Dairy Farmers of America

Related tags: Milk

Fonterra is to sell its 50% stake in DairiConcepts, its joint venture with Dairy Farmers of America (DFA), to the US dairy giant.

US dairy giant DFA has agreed to acquire Fonterra's 50% stake in the joint venture on December 31 for around NZ$196m (US$128m), the companies announced today. 

Established by DFA and Fonterra in 2000, DairiConcepts manufactures cheese, dairy ingredients and dairy flavor systems at eight facilities in Wisconsin, Minnesota, South Dakota, Missouri, Pennsylvania and Iowa.

“DairiConcepts has historically generated strong returns for our farmer-owners, and we look forward to continuing to strengthen the business and expand markets for our members’ milk,"​ said Rick Smith, president and CEO, DFA.

Despite Fonterra's decision, DFA, owned by more than 14,000 dairy producers across 48 US states, insists the companies' relationship "remains strong."

Non-core component

Revealing plans for the sale, Theo Spierings, CEO, Fonterra said its joint venture with DFA had become a "non-core component of its strategy."

“We still value our relationship with DFA, however, as the DairiConcepts business is almost completely stand-alone operationally, we have agreed that it would be simpler for one of the partners to buy the other out,”​ said Spierings.

“The US remains a key part of our global multi-hub strategy and this divestment does not prevent Fonterra from exploring new growth opportunities for this milk pool.”

He added that Fonterra and DFA have reached a "long-term supply agreement" ​as part of the sale. 

This, he said, means Fonterra's "US milk pool will continue to meet value add customer demand through our NZMP brand."

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