Sanford enjoyed a strong first-half result. Photo / Supplied
Will Fonterra’s legal wrangle with Australia’s Bega Cheese jeopardise the sale of Mainland?
Fonterra and Bega are locked in a legal dispute over trademark licensing, raising speculation that it could upset Fonterra’s plans to sell its consumer business.
Last November, Fonterra’s Australian arm sought a ruling that Fonterra’s divestment proposal would not impact the existing trademark licence agreements with Bega.
In the Australian Financial Review’s reporting of the case, Fonterra had argued it was concerned that “the likely price of any business sale will be jeopardised” if there was a risk that the Bega Cheese trademark could not be used by a prospective buyer.
The Supreme Court of New South Wales dismissed the case, but Fonterra has said it will appeal.
Australian media has speculated the ruling may potentially delay Fonterra’s proposed divestment, including the sale of its Oceania unit, as it could complicate the potential changes to the licence deal it has with Bega.
Meanwhile, Bega has expressed an interest in buying Fonterra’s Oceania businesses and sees itself as a natural acquirer.
Forsyth Barr senior analyst Matt Montgomerie said he doubted the impasse would have a material impact on any potential deal to sell Mainland, although clearly Fonterra would rather not have the complication.
“Fonterra would have preferred to not have this issue hanging over them, but, in terms of the overall divestment, with Bega being just 6% of Mainland’s revenue, some of the press seems slightly exaggerated to us,” he said.
“It (Fonterra-Bega) has clearly been a partnership for some time - more than 20 years - but the ability for it to materially jeopardise a transaction I think is unlikely.
“But not having Bega - who clearly have some interest in the Oceania business - possibly means one less player in the overall bidding process, but I am not worried that it will impact the transaction greatly,” he said.
It’s a year ago now that Fonterra first announced its step-change in strategic direction.
Fonterra said at the time the process would take “at least” 12 to 18 months.
Earlier this month, French food group Lactalis lodged a proposal with the Australian Competition and Consumer Commission to acquire Fonterra’s global consumer business and its dairy ingredients and food services businesses in Australia.
As it stands, Lactalis has about 500 farmer-suppliers across New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia.
Lactalis processes raw milk into dairy products such as fresh milk, cheeses, chilled yellow spreads and yoghurts, as well as dairy ingredients such as milk powders.
It supplies products to retail and food services businesses through brands such as Pauls, Vaalia and Kraft.
While Fonterra’s “dual-track” sale process is for an initial public offer or a trade sale, Montgomerie says the latter is the most likely.
Ready-mix concrete (RMC) production has had a steady start to 2025, according to Stats NZ.
While volumes are still below 2024 levels, there are signs of stabilisation and even some life in the largest region, Auckland.
“This aligns with comments from listed construction-related companies, which expect modest improvement in activity over the second half of 2025,” Forsyth Barr said in a report.
Residential consents have stabilised, and recent Government announcements on health, education, and transport investment have seen the non-residential and infrastructure pipeline begin to firm up.
Fletcher Building’s upcoming investor day on June 24 is the next scheduled update from the listed building materials companies.
Jarden expects Fletcher Building management to detail its strategy for capital structure, its operating model, and a portfolio reset.
“With the infrastructure recovery slower than expected and residential markets still soft, we now forecast 2026 ebit [earnings before interest and tax] of $477m (from $528m).”
Jarden retains a “buy” rating on Fletcher.
“Our illustrative sum-of-the-parts (SOTP) valuation implies Fletcher Building could be worth $4.60 per share, a 35% premium to the current share price, highlighting the potential for a bold portfolio strategy.”
Management had undertaken divisional profitability analysis, including branch-level reviews at PlaceMakers.
“We expect the messaging will be evolutionary rather than revolutionary, with recent under-performance framed as cyclical and the business positioned for recovery.”
Fletcher Building continues to assess various portfolio options. Laminex may be considered for monetisation, although market conditions complicate timing.
Housing may be restructured for a partial divestment, Forsyth Barr said.
NZ Steel remains under review, it added.
PlaceMakers is likely to be retained, with a clearer focus on commercial customers.
Jarden said the trading environment remains challenging, pushing the recovery beyond early 2026.
“Infrastructure activity is emerging but subject to delays.
“Commercial shows modest momentum, supported by projects such as Auckland Airport, wind farms, and data centres, one of the few areas where momentum is building.
“Residential remains under pressure, with a backlog of unsold stock.
“While an improvement is expected as interest rate cuts flow through in CY25 [calendar year 2025], underlying activity remains weak.”
Jarden estimated Auckland building activity fell by 26% in Fletcher Building’s 2025 financial year and forecasts a further 6% decline in 2026.
“Reflecting these headwinds, we have reduced our full year ebit forecast from $528m to $477m,” Jarden said.
Shares in fishing company rallied 20c to $5.15 after the company reported a strong first half result.
For the six months to March, revenue hit $286m, up 3.6%.
Adjusted earnings before interest and tax came to $54m, up 40.3%.
Sanford’s net profit after tax shot up 110% to $34m.
Managing director David Mair said it was the company’s highest recent half-year adjusted ebit result.
“Our improvement has been supported by an expected excellent performance from the salmon business; an improving mussel result; despite challenges facing our wild-catch fleet,” he said.
Contact Energy has appointed Matt Forbes, its former head of corporate finance, as its chief financial officer.
Forbes has been acting CFO since predecessor Dorian Devers was appointed chief development and major projects officer in January.
Over the last 15 years, Forbes has worked across the business in generation, corporate finance, strategy and investor relations supporting capital raising, Contact 26 strategy, the Manawa acquisition and has helped to reshape Contact’s portfolio, the company said.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
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