The Bega-FrieslandCampina consortium is preparing to directly challenge two other major contenders for Fonterra’s valuable assets: UBS-advised Japanese food giant Meiji Holdings Co, and the formidable French dairy powerhouse, Lactalis. All three parties submitted initial, non-binding offers on July 4, with another decisive round of final bids expected in the coming weeks. This competitive environment underscores the attractiveness of Fonterra’s Australian operations to global dairy manufacturers and agribusiness investors.

Fonterra, a New Zealand-based cooperative, has been meticulously working on the divestment of its Australian consumer products business for approximately a year. This segment notably includes popular brands such as Mainland and Perfect Italiano cheese, Western Star butter, and holds the crucial license for Bega Cheese branded products within Australia. Fonterra has mandated investment banks JPMorgan, Craigs, and Jarden to explore two strategic options: either spinning off the business onto the ASX as “Mainland Group” or pursuing a direct trade sale.

While Fonterra has internally valued the potential spin-off, Mainland Group, at an impressive $4 billion, dairy industry analysts suggest that the final sale price is likely to be lower. In a key strategic move, Rothschild-advised Lactalis gained an early advantage a week after the initial bids, securing pre-emptive approval from Australia’s competition regulator. Bega also stated its intent last month to apply for similar pre-emptive clearance from the ACCC, emphasizing its position as the “natural acquirer” and expressing strong interest in the Fonterra Australian business.