French dairy multi-national Lactalis is seeking to acquire Fonterra’s consumer and ingredient and foodservice businesses in Australia, according to a filing with the competition regulator.
Lactalis in FY2024
In 2024, Lactalis Group posted +2.8% growth in its revenue over 2023, exceeding €30bn for the first time.
Operating income rose by +4.3% whilst net income fell from €428m to €359m, representing 1.2% of revenue.
Operating through the Lactalis Australia subsidiary Down Under, the company is one of the nation’s largest milk processors. It’s supplied by 500 farmers and is behind dairy products from brands such as Pauls, Oak, and probiotic yogurt range, Vaalia. Lactalis also runs a foodservice arm in Australia, supplying milk, cheese, butter, cream, desserts and more.
The French dairy multi-national looks to be a step ahead of the competition to acquire Fonterra’s assets, having filed for an informal merger approval with the ACCC earlier this month.
However, Australian cheese company Bega is also interested – with company executive chairman Barry Irvin stating he hoped the two parties would ‘work constructively’ on the sale of the Oceania businesses ‘of which Bega Group is a natural acquirer and remains very interested in’.
Irvin’s comment came after a trademark licensing agreement case filed by Fonterra against Bega was dismissed in court last week – with Fonterra left to foot the bill.
Lactalis was fined by the ACCC
In 2023, the Australian Competition and Consumer Commission (ACCC) fined Lactalis Australia AU$950,000 for breaching the country’s Dairy Code in the 2020/21 milk season having been found to offer contracts with an ‘impermissible combination of terms’, including such that made it commercially unviable for suppliers to sell milk to third-party buyers.
Source: Archive
The New Zealand co-op has since announced it will appeal the court ruling, which means the sale of Mainland Group – as the Oceania assets have been named – could be delayed.
Fonterra has an existing relationship with Bega, packing Bega’s branded products such as cheese crackers.
Trade sale or an IPO
Fonterra CEO Miles Hurrell has maintained that the co-op continues to pursue a dual-track process, with a trade sale and an IPO both possible options.
The co-op conducted investor roadshows in March and has appointed influential industry figure Anne Templeman-Jones as chair-elect, in preparation for a possible IPO.
But now, a trade sale looks more likely, with Lactalis and Bega both showing concrete interest in an acquisition.
The informal merger review launched by the ACCC is set to conclude on May 26, with public comments sought until May 16, 2025.
Those wishing to make a submissions should visit the ACCC website for more information.
