The Resolution Clears the Path for Fonterra’s Consumer Business Sale to Lactalis, Allowing the $3.46 Billion Deal to Proceed.
Fonterra and Bega Group have successfully resolved their legal dispute over the Bega licenses in Australia. This resolution is a critical step, as it removes a major hurdle for Fonterra’s previously announced sale of its global consumer and associated businesses to French dairy giant Lactalis. The deal, valued at NZ$3.845 billion ($3.46 billion), includes brands like Mainland and Anchor, as well as the licenses for Bega-branded products in Australia.
The core of the dispute centered on whether the sale to Lactalis would trigger “change of control” clauses within the licence agreements, potentially altering the terms. In a new development, both companies have confirmed in separate statements that the legal proceedings will be discontinued. Fonterra stated that Bega agrees the structure of the sale will not constitute a change of control, ensuring the licences will operate as intended under the new ownership.
Bega Group has also expressed its satisfaction with the outcome, stating that the sale does not alter the current contractual arrangements related to its brand. The company looks forward to working with both Fonterra and Lactalis through the transition. This amicable resolution ensures that the commercial relationship and the benefits Bega receives from its agreements will remain intact.
With the legal challenge resolved, the Bega licenses held by Fonterra’s Australian business will now be included in the divestment to Lactalis. The article specifies that Lactalis will pay an additional NZ$375 million for these licenses, bringing the total value of the sale to Fonterra to NZ$4.22 billion.
The resolution is a major development in the international dairy community, providing clarity on a significant transaction. It allows Fonterra to move forward with its strategic divestment and focus on its core businesses, while also ensuring the stability of key commercial relationships in the highly competitive agribusiness market. This outcome highlights the complex legal and commercial issues that can arise in major dairy economics deals.
Source: Inside FMCG, “Fonterra, Bega make peace in wake of Lactalis deal”
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