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Fonterra hopes to wrap up a sale by mid-2025, sources say

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Company is still looking at the IPO process, sources say

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Fonterra shares up 8% this year, market value $4.3 billion

By Kane Wu, Scott Murdoch and Yantoultra Ngui

HONG KONG/SYDNEY, May 1 (Reuters) - Companies including

Japan's Meiji, French group Lactalis and Canada's Saputo ( SAPIF ) are

considering bidding for the units dairy giant Fonterra

is seeking to divest, two sources with knowledge of the matter

said this week.

The companies would be bidding for Fonterra's global

consumer businesses consisting of the operations and marketing

of brands such as Mainland and Anchor butter, Kapiti ice cream

and cheese and the Anlene powdered milk supplement. The sale

also includes the Fonterra Oceania and Fonterra Sri Lanka units

with operations from milk collection to processing to supplying

products to consumers and food-service companies.

A deal for the businesses Fonterra is divesting could be

valued at around NZ$4 billion ($2.37 billion), the two sources

said.

U.S. private equity firm Warburg Pincus is also interested

in buying the businesses, said one of the two sources and a

third source with knowledge of Warburg's interest.

New Zealand-based Fonterra announced in November a dual

track plan to either sell the units or to list them through an

initial public offering so it could focus on its core activity

of processing milk at home.

The company hopes to wrap up a sale by the middle of this

year but is still looking at the IPO process, according to the

first two sources.

The three sources declined to be named as the matter was

private.

Fonterra said on Wednesday the process is confidential

and cannot comment. Lactalis and Warburg Pincus declined to

comment. Meiji said it is unable to make an official comment.

Saputo ( SAPIF ) did not respond to a request seeking

comment.

Fonterra is concurrently pressing ahead with IPO. In

February, it named key management team members for the possible

company, which it will name Mainland Group if the IPO route is

chosen.

Before making a final decision on a sale or IPO, the company

plans to seek a vote from its farmer shareholders for their

preferred divestment option.

The operations being considered for a possible divestment

accounted for about 19% of Fonterra's operating earnings in the

first half of fiscal 2024, it said in May 2024.

Shares of Fonterra have climbed 8% so far this year, giving

it a market value of around $4.3 billion, LSEG data showed. The

company's shares were down 0.2% on Thursday at NZ$4.53.

($1 = 1.6866 New Zealand dollars)