Australia’s competition regulator has launched a public consultation into French dairy giant Lactalis’ proposed acquisition of key businesses from New Zealand-based Fonterra Co-operative Group, as the latter proceeds with its strategic global divestment.
The Australian Competition and Consumer Commission (ACCC) confirmed on May 2 that it is actively seeking stakeholder views on the proposed acquisition, which includes Fonterra’s global consumer business and its ingredient and foodservice operations in Australia. The ACCC is examining whether the deal would substantially lessen competition, particularly in the markets for raw milk acquisition, milk processing, and the wholesale supply of dairy products and ingredients.
Although Lactalis has not formally announced the deal, the ACCC’s review follows reports—first published by Reuters—that several global firms, including Japan’s Meiji and France’s Lactalis, were exploring bids for Fonterra’s consumer and integrated operations across Oceania and Sri Lanka. Fonterra had previously disclosed that it had reached a stage in its divestment process where potential buyers may seek regulatory clearance, a standard step ahead of finalizing any transaction. Both Fonterra and Lactalis have declined to comment further.
The transaction under consideration is significant, with an estimated value of NZ$4 billion (US$2.37 billion). Fonterra has confirmed that the assets in question accounted for approximately 19% of its operating earnings in the first half of fiscal year 2024. The portfolio includes well-known consumer brands such as Anchor, Mainland, Kāpiti, Anlene, and Anmum.
Fonterra’s Oceania business — formed from the merger of Fonterra Brands New Zealand and Fonterra Australia — comprises consumer, foodservice, and ingredient operations. Its Sri Lanka division also spans consumer and foodservice activities.
As part of its dual-track divestment strategy, Fonterra is pursuing both a trade sale and a potential initial public offering (IPO). In preparation for a possible IPO, the cooperative has recently strengthened its governance framework, naming Anne Templeman-Jones as Chair-elect of the Audit and Risk Committee for the newly established Mainland Group Board. This followed the March appointment of Liz Coutts ONZM as Chair-elect of the Board itself.
CEO Miles Hurrell has described the divestment strategy as a return to core operations, with an emphasis on ingredients and business-to-business foodservice growth. The company plans to consult its farmer-shareholders before selecting a final divestment route. Following the November 2024 announcement, Fonterra’s shares rose by as much as 2.6%, reflecting market support for the strategic reset.
In a positive signal for farmers, Fonterra has also raised its 2024/25 milk price forecast. The midpoint was increased to NZ$9.50 (USD $5.60) per kilogram of milk solids (kgMS), up from NZ$9.00 (USD $5.31), citing robust global demand and rising commodity prices in markets such as China and parts of Africa.
The ACCC’s current focus is on assessing whether the proposed acquisition by Lactalis would reduce competition in several areas:
- The acquisition of raw milk in regions where both companies operate,
- The provision of milk processing services,
- The wholesale supply of dairy ingredients (e.g., milk fats, whey powders) and finished products (e.g., milk, cheese, butter, yogurt).
The regulator has invited interested parties to submit feedback by May 16, 2025, referencing the subject line: Submission re: Lactalis / Fonterra.
While the ACCC’s inquiry remains informal at this stage, the outcome could have wide-reaching implications for both domestic dairy competition in Australia and the broader landscape of dairy consolidation in the Southern Hemisphere.
