Fonterra’s farmer advisory body has told the company 96 per cent of its New Zealand members support the sale of the Oceania division, which includes the Australian operation.
The company does not require the advisory body’s permission.
However the proposal to sell the division to Lactalis still requires a vote by co-operative members.
Fonterra Advisory Council chair John Stevenson said the council commissioned its independent analyst Northington Partners to provide an independent assessment of the merits of the proposal.
“Northington Partners are of the view the divestment of Mainland is in the best interests of Fonterra shareholders,” Mr Stevenson said.
He said in the analyst’s opinion:
- the price that will be received for Mainland is attractive and consistent with peer companies and transactions;
- the commercial case for divestment is sound;
- the sale will make Fonterra a better business; and
- Fonterra has the balance sheet strength to fund the proposed capital return and its near-term investment plans.
“A key area of discussion within council was the expected performance of Fonterra after the divestment,” Mr Stevenson said.
“The council was pleased to see the proforma Fonterra and Mainland financial reporting showing the potential financial impact of divesting Mainland.
“And we were very pleased to see that Fonterra is targeting earnings to be back at current levels (71 cents per share) within three years, offsetting the impact of the proposed divestment.”