New Zealand’s dairy giant, Fonterra, has sold its nine percent stake in New South Wales-based Bega Cheese for $74 million.

 

Fonterra, which has a wide presence in Australia with suppliers located in Tasmania, Victoria, South Australia, and New South Wales, acquired the stake in Bega in 2013 when Bega was in the midst of a four-way bidding battle with Murray Goulburn, Lion, and the eventual successful bidder, Canada’s Saputo Inc., to buy Warrnambool Cheese and Butter (WCB).

 

Fonterra’s export business has taken a significant hit to earnings within the past year as the industry saw global dairy prices plunge by more than 30%. In response, the co-op is shifting its focus to investing in value-added dairy products according to chief financial officer Lukas Paravicini, that can offer greater margins in order to gain the best returns for its shareholders.

 

Fonterra’ s move to sell its stake in Bega will have no effect upon the working relationship between the two companies, with Fonterra maintaining its license to sell the Bega brand in Australia and the existing cheese supply contract with Bega.

 

"The Bega brand has an important role in our cheese portfolio where we are a market leader," said Mr. Paravicini. "We will continue to build our relationship with Bega, which goes back more than a decade."