The proposal has been met with generally positive feedback from shareholders so far, according to the Fonterra Co-operative Council. The council chairman, John Stevenson, is emphasizing the importance of farmers looking at the details of the proposal, understanding its implications, and casting their votes. The sale, which has a 50.1% approval threshold to proceed, is expected to receive a much higher level of support, reflecting the positive sentiment among many farmers.

The total sale price of $4.22 billion was recently finalized after resolving a dispute with Bega Cheese, which added $375 million to the original valuation. This financial clarity provides farmers with a strong incentive, including a targeted tax-free capital return of $2 per share. The resolution of the Bega dispute is seen as a positive development, providing certainty and a clear path forward for the inclusion of the Bega licences in the sale.

This strategic move is set to change Fonterra’s business model fundamentally, as it shifts away from consumer-facing brands to a greater focus on its ingredients and foodservice operations. While the company will retain a long-term agreement to supply milk and ingredients to Lactalis, the sale represents a major pivot. The decision aligns with the co-op’s goal of becoming a simpler, more streamlined and efficient organization.