DAIRY giant Fonterra is selling its Australian yoghurt and dairy dessert business to Parmalat.
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The sale, which is conditional on regulatory and other approvals, is expected to be completed in the first half the of 2016.
Fonterra says the divestment of its Australian yoghurt and dairy desserts business, which includes manufacturing sites at Tamar Valley and Echuca as well as its Australian yoghurt and dairy dessert brands, is part of a comprehensive plan to return the co-operative’s Australian business to "strong and sustainable profitability".
All Fonterra’s Echuca and Tamar Valley employees in the yoghurt and dairy dessert business have received offers of employment from Parmalat.
In a statement, Fonterra Managing Director Oceania Judith Swales said the divestment is a decisive step "to lock in our competitive position in the Australian consumer market".
“We will continue investing in programs and innovation that supports our market-leading brands in key retail categories, including Western Star butter and Perfect Italiano, Mainland and Bega cheeses, Anchor cream, and fresh milk," Ms Swales said.
"Divesting the yoghurt and dairy desserts business will allow us to focus on what we do best, so we can continue delivering a competitive milk price to our suppliers, benefits to our customers, innovative dairy foods to our consumers, and improved returns to our farmer shareholders and unit holders."
Today's announcement follows on from a number of moves by Fonterra.
The NZ-based co-operative recently announced a $120 million investment to rebuild its factory in Stanhope, in northern Victoria, as a state-of-the-art primary cheese manufacturing plant, with 50 per cent extra capacity.
It divested its 9 per cent stake in Bega, with the funds being re-invested into the Stanhope cheese plant.
Fonterra also announced plans with Bellamy’s Australia Ltd and China’s Beingmate Baby and Child Food Company Ltd that provide opportunity for significant growth in nutritional volume from Fonterra Australia.
It commissioned a multi-million dollar beverages plant at its Cobden facility, in western Victoria, to service a 10 year partnership with Woolworths.
Fonterra chief executive Theo Spierings said Australia is Fonterra's largest milk pool outside New Zealand, and "an integral part of our multi-hub strategy".
"Our Australian operations have particular ingredient strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses. As a key part ofour multi-hub strategy, we are matching these strengths with the opportunities across our 100 markets,” Mr Spierings said.
