Fonterra has finished the sale of two fully-owned China farming hubs in Ying and Yutian. The sale of the farms to Inner Mongolia Youran Dairy Co., Ltd (Youran) was liable to anti-trust clearance and some other regulatory approvals in China since the October of last year. These approvals have now been obtained.
The transaction proceeds include the original sale price of $513 million along with $39 million in settlement adjustments, giving cash proceeds of $552 million in total.
Miles Hurrell, CEO of Fonterra states that the completion of the sale is an important milestone for Fonterra following its strategic refresh.
“Fonterra has contributed to the development of the Chinese dairy industry by establishing these farms and we’re pleased to now hand ownership over to Youran for the next phase of development. The China market is fast moving and inspires us to keep innovating. Our China team will now continue with their focus on creating value from our New Zealand farmers’ milk through new products, applications and close partnerships with our customers,” Hurrell further added.
Hurrel also informed- “As we’ve seen from our recent FY21 interim financial results, our China business is performing very well, underpinned by strong demand for New Zealand dairy driven by our team on the ground. With these foundations, we are well placed to continue to grow our Greater China Foodservice, Consumer and Ingredients businesses.”
The completion of the sale of Fonterra’s 85% interest in its Hangu farm to minority shareholder Beijing Sanyuan Venture Capital Co., Ltd., as announced in October 2020, is in progress and is anticipated to be accomplished this financial year.
Founded in 2001, Fonterra Co-operative Group Limited is a New Zealand-based multinational publicly traded dairy co-operative owned by about 10,500 farmers of New Zealand. The company accounts for around 30 per cent of the world’s dairy exports. With revenue of over NZ$17.2 billion, it stands as the largest company of New Zealand.