Fonterra is set to sell its 50 per cent interest in its US joint venture DairiConcepts as Dairy Farmers of America (DFA) purchases the business for NZD$196 million.
Established in 2000, the DairiConcepts partnership saw Fonterra contributing US dairy/cheese flavours business alongside the DFA’s cheese and cheese-powder assets.
According to Fonterra CEO Theo Spierings, both Fonterra and the DFA had a shared interest in promoting the growth in global dairy consumption and furthering development of co-operative dairy farming.
“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.”
Fonterra had decided to exit the partnership as it was considered to be a non-core component of its strategy.
An agreement between the two partners stated that the DairiConcepts business was able to completely operate on its own, making it simpler for one of the partners to buy the other one out.
Spierings is confident that the US will remain to be a key part of their strategy, which will not prevent Fonterra from exploring new growth opportunities for their milk pool.