Fonterra shareholders say ‘oui’ to $3.2b capital return from sale of Mainland to Lactalis

Fonterra's farmers have approved the capital repayment arising from the sale of Mainland.

Fonterra’s shareholder farmers have approved a $2-per-share return of capital arising from the sale of its Mainland global consumer and related businesses to French dairy giant Lactalis.

The capital return went to the vote today at a virtual special meeting, with 98.85% in favour. The proposal required 75% support.

“Today’s result means Fonterra can now seek final court approval to undertake the capital return of $2 per share to shareholders and unit holders, subject to the divestment of Mainland Group to Lactalis being completed,” Fonterra said.

Fonterra expects the transaction to be complete in the first quarter, subject to separation of the businesses from Fonterra and provided the remaining regulatory approvals are received within the expected timeframes.

Once these steps have been completed, Fonterra said it would confirm the record date for the capital return, which will be within the five business days prior to the capital return payment being made to shareholders and unit holders.

The co-operative is targeting a tax-free capital return of $2.00 per share to shareholders and unit holders, equivalent to around $3.2 billion, once the sale is complete.

Fonterra last year struck a deal to sell Mainland to Lactalis for a higher-than-expected $4.22b.

Analysts estimate the sale will deliver about $400,000 tax-free to the average Fonterra farmer.

The sale will also mean Fonterra will have $1b to spend over the next three to four years in projects to generate further value through its remaining high-performing Ingredients and Foodservice businesses.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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