Lactalis to become the largest dairy company in Australia with $3.4b purchase of Fonterra

French dairy giant Lactalis will cement its position as Australia’s largest dairy company after it finalises its purchase of Fonterra Cooperative Group for $3.4 billion.

As announced on Friday August 22, Fonterra has agreed to the sale of its global business to Lactalis, including its operations in Australia, Oceania, Sri Lanka and the Middle East.

Fonterra’s assets include well-known brands Western Star butter, Perfect Italiano and Mainland cheeses.

As part of the sale agreement, Fonterra will continue to supply milk and other products to the divested businesses, meaning New Zealand farmers’ milk will still be found in iconic dairy brands including Anchor and Mainland.

Fonterra CEO Miles Hurrell says the sale agreement represents a great outcome for the Co-op.

“As the world’s largest dairy company, Lactalis has the scale required to take these brands and businesses to the next level," Mr Hurrell said.

"Fonterra farmers will continue to benefit from their success, with Lactalis to become one of our most significant Ingredients customers."

“At the same time, a divestment of these businesses will allow Fonterra to deliver further value for farmer shareholders and New Zealand by focusing on our world leading Ingredients and Foodservice businesses, through which we sell innovative products to more than 100 countries around the world, from our home base here in New Zealand."

Lactalis CEO Emmanuel Besnier said with this acquisition, Lactalis significantly strengthens their strategy across Oceania, Southeast Asia and the Middle East.

"Combining the Fonterra consumer business operations and market leading brands with our existing footprint in Australia and Asia will allow Lactalis to further grow its position in key markets," he said.

"I'm delighted to become a key partner to Fonterra over the long term as well as I'm looking forward to welcoming new teams to the Lactalis family."