Photo: 123RF, RNZ / Rebekah Parsons-King
Dairy co-operative Fonterra and Swiss conglomerate Nestlé have agreed to sell their joint venture in Brazil.
Dairy Partners Americas (DPA) Brazil will be sold to French dairy giant Lactalis for about BRL$700 million (NZ$210m) and is expected to be completed by mid-2023, subject to regulatory approvals.
The DPA joint venture was set up in 2003 to make and sell dairy products throughout Latin America. In 2014, it refocused its activities on Brazil and chilled dairy.
Fonterra has been selling its overseas assets as part of its strategy to extract more value from local milk production and put less emphasis on overseas ventures.
Last month, it sold its Chilean business, Soprole, which it had owned for 36 years, for more than a billion dollars.
Chief executive Miles Hurrell said the sale of DPA Brazil aligned with its strategy of prioritising its New Zealand milk pool.
"DPA Brazil has reached maturity as an investment for us, and the sale allows us to prioritise our resources to the businesses that are core to our strategy," he said.
Fonterra was pleased to have secured the sale, which was delayed due to market conditions related to Covid-19, Hurrell said.
Fonterra held a 51 percent stake in DPA Brazil, while Nestlé held 49 percent.
DPA Brazil operated two plants and employed 1300 people.
The sale is subject to approval from competition regulators.
Fonterra previously announced its fiscal year 2023 guidance would continue to reflect the underlying performance of DPA Brazil during the pre-completion period.
It said it would provide an update on the overall impact of its divestment programme as part of its FY23 financial reporting.