Fonterra and Nestlé have agreed the sale of their joint venture Dairy Partners Americas (DPA) to Lactalis for BRL700m (US$131.5m). The sale is subject to receipt of regulatory approvals from competition authorities and is expected to complete by mid-2023.
This is the last of Fonterra’s major South American investments, with the New Zealand co-op having announced it will sell its shares in Chile-based Soprole to Gloria Foods last month.
DPA was set up in 2003 to manufacture and commercialize dairy products throughout Latin America and has since refocused its activities on Brazil and chilled dairy. It operates two plants and markets brands including Nestlé, Chamyto, Ninho, Chandelle, Chambinho, Neston and Molico. Fonterra owns 51% of the shares and Nestlé has a 49% stake in the JV.
Fonterra chief executive Miles Hurrell explained the sale aligned with the co-op’s strategy of prioritising its New Zealand milk pool. “DPA Brazil has reached maturity as an investment for us, and the sale allows us to prioritise our resources to the businesses that are core to our strategy,” he said.
Hurrell added that the sale had been delayed due to market conditions related to COVID-19, DPA having been held for sale in Fonterra’s financial statements since January 2020.
The co-op’s previously announced FY23 earnings guidance will continue to reflect the underlying performance of the DPA Brazil business during the pre-completion period. Fonterra will provide an update on the overall impact of its divestment programme as part of its FY23 financial reporting.
Lactalis has been approached for comment.