FSF
28/05/2014 08:37
JOINTV
REL: 0837 HRS Fonterra Shareholders' Fund (NS)
JOINTV: FSF: Fonterra and Nestle Realign Latin American Joint Venture
Fonterra and Nestle have realigned their 10-year old Dairy Partners Americas
(DPA) 50/50 joint venture and signed binding agreements covering the revised
scope of the partnership.
Under these agreements, signed today in Sao Paulo, Brazil:
o Fonterra will take a 51 per cent controlling stake in DPA Brazil, with
Nestle holding the balance.
o Fonterra and its local partner will acquire Nestle's share of DPA
Venezuela, and will continue to operate the business as a joint venture.
o Fonterra will sell its share in DPA's milk powder manufacturing business to
Nestle.
o Nestle will buy Fonterra's share in Ecuador.
The DPA Brazil business will become focussed primarily on chilled dairy
products, sold under Nestle brands.
Fonterra's CEO, Theo Spierings, says the DPA joint venture has performed well
for ten years and the time is now right to realign the partnership to better
reflect the respective strategies of Nestle and Fonterra in the region.
He says the revised alliance supports Fonterra's group strategic focus on
everyday nutrition in key growth markets such as Latin America, China and
Indonesia.
"We value our relationship with Nestle and this high-quality agreement will
see our successful alliance continue.
"The deal also enables the Co-operative to drive more long-term value for its
farmers and investors," he says.
Fonterra's Managing Director of Latin America, Alex Turnbull, says: "The
region's economies have undergone considerable change during the past 10
years. We've seen increased prosperity in markets like Brazil with rapid
urban growth and a focus on healthy nutrition driving demand for dairy
products.
"A bigger stake in DPA Brazil means we will be extremely well placed to drive
our volume and value growth strategy focusing on everyday nutrition
offerings."
Fonterra's Latin American footprint drives more than 900,000 metric tonnes of
volume per year and $3.5 billion (NZD) in revenue from consumer dairy,
foodservice and high value ingredients.
"We are very proud with what we've achieved through the DPA alliance with
Nestle and look forward to continuing to work together with renewed focus,"
says Mr Turnbull.
The changes to the joint venture are subject to regulatory approval, and
other customary conditions. The parties are anticipating completion of the
transactions by the end of 2014.
Fonterra expects to receive a net cash payment of about $96 million (NZD)
from the interrelated transactions.
About Dairy Partners Americas
Set up in 2003, Dairy Partners Americas is the largest dairy company in South
America, purchasing and processing more than two billion litres of milk each
year in Brazil alone. DPA produces ingredients and consumer products with
strong brands in the liquid and chilled dairy market throughout Latin
America.
Fonterra licences brands and provides its large-scale milk procurement,
product development, and manufacturing and processing expertise, as well as
technical services and certain technology to the alliance.
Nestle licences brands and provides its product development, manufacturing
and processing expertise, as well as distribution infrastructure to the
alliance.
End CA:00250949 For:FSF Type:JOINTV Time:2014-05-28 08:37:51
