Fonterra Co-operative Group Ltd has agreed to sell its 50.0004 per cent shareholding in New Zealand Dairy Foods Ltd to Graeme Hart's Rank Group Ltd.
Fonterra was required to sell its stake by the end of September under the Dairy Industry Restructuring Act.
Rank Group Ltd will pay $1.70 per share for
Fonterra's 70 million shares. The purchase will occur under a full takeover offer to be made by Rank Group for all of the shares in New Zealand Dairy Foods at $1.70 per share.
Fonterra Chief Financial Officer Graham Stuart says the sale meets the company's obligations under the Dairy Industry Restructuring Act, is good for New Zealand consumers, provides certainty for Dairy Foods' employees and is the best offer for Fonterra and its shareholders.
"From the time the Merger Agreement was signed to create Fonterra, we were clear that we would need to divest our shareholding in New Zealand Dairy Foods to ensure tough competition in the domestic consumer market, and the Government later put this undertaking into law," Mr Stuart said.
"The $1.70 offer is the best available following an exhaustive sales process that canvassed all potential international buyers. The deal also provides for minority shareholders in New Zealand Dairy Foods – who are mostly Fonterra shareholders – to receive the same takeover offer as Fonterra.
"Fonterra is pleased that the best offer came from a New Zealand buyer and that New Zealand Dairy Foods will remain in New Zealand ownership, while Rank Group's controlling interest in Burns, Philp & Co Ltd also provides New Zealand Dairy Foods with a link to a global food company with operations in over 25 countries."
Dairy Foods has approximately 40 per cent of the New Zealand dairy market. Its brands include Anchor, Fernleaf, Chesdale, Fresh 'n' Fruity, Royal Tasman and Ornelle.
