Dairy giant Fonterra is selling its 50 per cent stake in drug supplier company, DFE Pharma for $NZ633 million ($A589 million) in a bid to further reduce debts.
The sale to a fund managed by CVC Capital Partners, along with proceeds from other asset sales including $NZ380 million for Tip Top, will bring Fonterra’s debt reduction efforts to over NZ$1 billion.
Fonterra chief executive Miles Hurrell said the company is ready to rebuild now after incurred losses worth $NZ196 million loss in FY19. The dairy giant set a $NZ800 million debt reduction target for the 12 months to July 31.
“A year ago, we started a full portfolio review to re-evaluate every investment, major asset and partnership, to make sure they were still right for the Co-op. In March, we advised that we were reviewing our share of DFE Pharma, a 50% joint venture with Royal Friesland Campina. DFE Pharma was identified for sale due to the substantial capital required for its future growth,” Hurrell said in a statement.
“We set ourselves a tough initial target for debt reduction and we are pleased with the progress we are making.”
Last month, the dairy giant said it was expecting a second consecutive full-year loss between $NZ590 million to $NZ675 million, attributed to “significant adverse” one-off adjustments including a $NZ70 million write-down of its Australian business due to the drought.
“We are now at the end of that process and have sold our share of DFE Pharma to CVC Strategic Opportunities II, a fund managed by CVC Capital Partners, a leading private equity and investment advisory firm, managing approximately US$83 billion of assets in 73 companies worldwide,” added Hurrell.
