Overall, Fonterra has flagged $4bn of assets for divestment globally, about half of which are in its ANZ unit.
Expectations are mounting for Fonterra to lean towards a dual listing on the Australian and New Zealand markets next year rather than a trade sale for its $2bn Fonterra Oceania business, with the dual-track process to begin in earnest early next year.
The company confirmed it would move forward with a sale of assets which were flagged for divestment in May.
They include its Australian consumer, food service and ingredients business, and NZ Fonterra Brands in a new unit now named Fonterra Oceania, as well as its global consumer business and Fonterra Sri Lanka.
Australian and NZ brands on offer include Anchor and Western Star butter, and Mainland and Perfect Italiano cheeses.
It has placed other non-core assets up for sale in Asia, China, the Middle East, Africa and the Americas.
Fonterra hired Jarden and UBS to float part of its $1.2bn Australian consumer business in 2021, but the deal was suspended when the initial public offering window closed.
Now JPMorgan, Jarden and Craigs are involved, but some suspect other banks may also be brought in to work on a listing.
One of the key factors that could weigh in the favour of a listing is the change of control clause related to the licensing agreement for use by Fonterra of the Bega brand on products.
The Bega brand would likely be lost with a full sale of the Australian and New Zealand brands business, but this would not be the case involving a float where Fonterra retains 50 per cent of the company.
The other option is that Bega is part of the solution for Fonterra, bidding for the business with perhaps another party.
Among the strategic players which have so far shown some interest in the Fonterra assets are Lactalis, Friesland Campina and Danone, while private equity firms Kohlberg Kravis Roberts, Permira and Pacific Equity Partners have taken a look.
Fonterra’s Australian business is less lucrative from an earnings margin perspective than what is on offer out of NZ, where the milk supply cost base is low, say industry sources.
Currently, Australian farm gate milk prices are higher than those in NZ in what has been described as an awkward dynamic.
Logistics buyout
DP World tapped advisory firm Gresham for the purchase of the Australian listed Silk Logistics that has backed the deal and had Barrenjoey offering defence advice.
The global logistics firm will pay about $200m for the business, valuing its equity at about $175m.
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