New Zealand-based dairy cooperative Fonterra will sell its 50% stake in DairiConcepts to US-based cooperative Dairy Farmers of America (DFA) for NZD$196m ($126.7m) . DairiConcepts is the joint venture between Fonterra and DFA.
Under the agreement, DFA will buy Fonterra's 50% stake on 31 December 2015.
The partnership with DairiConcepts was initiated in 2000. At the time, Fonterra had contributed main ingredients to its US dairy and cheese flavours unit and DFA offered several cheese and cheese-powder assets.
The joint venture included eight factories which manufactured specialty cheeses and other dairy ingredients, reports Radio New Zealand.
Fonterra CEO Theo Spierings said that the deal would not affect the long-term association of the two companies. Their collaboration began with a common interest in promoting growth in global dairy consumption as both the companies were members of the Global Dairy Platform and worked together for the development of cooperative dairy farming.
Fonterra exited the partnership as it found that it did not fit into its core competence strategy.
The company stated on its website: "We still value our relationship with DFA, however, as the DairiConcepts business is almost completely stand-alone operationally, we have agreed that it would be simpler for one of the partners to buy the other out."
"The US remains a key part of our global multi-hub strategy and this divestment does not prevent Fonterra from exploring new growth opportunities for this milk pool."
"A long-term supply agreement we have reached as part of the sale, means our US milk pool will continue to meet value add customer demand through our NZMP brand."
Recently, the company sold its 9% stake in Australia-based dairy company Bega Cheese for AUD$74m, as it intends to transform its Australian business. The co-operative did not disclose to whom it sold the stake. It had said that the stake sale will not impact the dairy major's commercial arrangement with Bega. The dairy co-operative had acquired the stake in 2013 and two years later, it was sold for $74m, thereby making a gain of 25%.
Image: Fonterra sells its stake in DairiConcepts. Photo: Courtesy of Serge Bertasius Photography/FreeDigitalPhotos.net.
