Fonterra considers change to co-op structure

New Zealand-based Fonterra is considering using a share sale to raise funds for overseas investment. Chairman Henry van der Heyden has set out plans to divide the co-operative in two and float its business operations as a separate company.

Fonterra’s 11,000 farmer shareholders would retain an 80% stake in the listed business, but there are concerns that the move could threaten their control over the world’s fifth largest dairy group.
Van der Heyden says opportunities exist around the world for Fonterra, which, despite being New Zealand’s only multinational company, is limited to New Zealand milk supply growth and borrowings for capital.
The intension, according to the chairman, is to invest in rapidly growing fresh milk and dairy products markets like China and India, drawing on cow-to-customer expertise.
The proposal is subject to farmer-shareholder approval and meeting of five pre-conditions. A proposal to list the operating company would be put to the co-operative’s shareholders around 2010.