Fonterra has announced it has sold its half share in joint venture DFE Pharma for $633 million freeing up money to reduce its debt.
Photo: Photo / AFP
The company, the world's largest dairy exporter, made the announcement to the New Zealand stock exchange just before opening trades this morning.
Fonterra said in March it proposed to sell the share in DFE Pharma which had been a joint venture set up in 2006 with Netherlands-based dairy company Friesland Campina to make pharmaceutical extracts.
CEO Mike Hurrell said the sale as well as a previous sale of Tip Top had given the troubled dairy giant around $1 billion for debt reduction.
The company is due to announce its annual results tomorrow.
Mr Hurrell said the sale follows a "full portfolio review to re-evaluate every investment, major asset and partnership, to make sure they were still right for the Co-op."
Fonterra identified DFE Pharma for sale due to the "substantial capital required for its future growth", he said.
"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."
DFE Pharma has been sold to CVC Strategic Opportunities II is made up of a cash payment of $537 million plus an interest-accruing vendor loan of $96 million, for a term of up to 15 years.