Fonterra Co-operative to divest 50% stake in DairiConcepts joint-venture

Fonterra Co-Operative Group will divest its 50% stake in DairiConcepts, a US joint-venture with Dairy Farmers of America (DFA).

DFA will buy this stake on 31 December 2015 for approximately NZD196m ($126.7m).

The joint-venture was set up in 2000, wherein Fonterra contributed its US dairy / cheese flavours business, while DFA supplied several of its cheese and cheese-powder assets.

Fonterra CEO Theo Spierings said that the deal will not have any impact on its longstanding relationship with DFA.

Fonterra decided to exit the partnership as it was a non-core part of its growth strategy.

Spierings added: "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.

"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."

Fonterra also signed a long-term supply agreement as part of the sale.

"A long-term supply agreement we have reached as part of the sale means our US milk pool will continue to meet value add customer demand through our NZMP brand," Spierings added.

This divestment comes as Fonterra pursues stronger partnership with Beingmate in order to meet the increasing demand for infant formula in China.