Fonterra agrees sale of Consumer and associated businesses

22 August 2025

Fonterra agrees sale of Consumer and associated businesses

• Fonterra has agreed to sell its Consumer and associated businesses to Lactalis for $3.845
billion NZD
• Sale is subject to certain conditions, including Fonterra farmer shareholder approval,
separation of the businesses and receipt of regulatory approvals
• Farmer shareholder vote to occur in late October or early November with Notice of Meeting
to be issued in October
• Fonterra targeting a tax free capital return of $2.00 dollars per share
• Sale includes long-term agreement for Fonterra to sell milk and ingredients to Lactalis
• Subject to the satisfaction of conditions, the sale is expected to complete in the first half of
2026
• Fonterra’s FY25 earnings guidance of 65-75 cents per share remains unchanged

Fonterra Co-operative Group Ltd today announced it has agreed the sale of its global Consumer
and associated businesses to Lactalis for $3.845 billion, subject to certain customary financial
adjustments and conditions including approval by farmer shareholders, separating the businesses
being sold from Fonterra, and receipt of certain final regulatory approvals.

The sale comprises Fonterra’s global Consumer business (excluding Greater China) and
Consumer brands; the integrated Foodservice and Ingredients businesses in Oceania and Sri
Lanka; and the Middle East and Africa Foodservice business.

In addition to the base enterprise value of $3.845 billion, there is potential for a further $375 million
increase from the inclusion of the Bega licences held by Fonterra’s Australian business, which if
progressed would take the headline enterprise value of the transaction up to $4.220 billion.

The Co-op is targeting a tax free capital return of $2.00 dollars per share, which is approximately
$3.2 billion, following completion of the sale.

As part of the sale agreement, Fonterra will continue to supply milk and other products to the
divested businesses, meaning New Zealand farmers’ milk will still be found in iconic dairy brands
including Anchor and Mainland.

Fonterra Chairman Peter McBride says over the last 15 months, the Board has thoroughly tested
the terms and value of both a trade sale and initial public offering (IPO) as divestment options.

“Following a highly competitive sale process with multiple interested bidders, the Fonterra Board is
confident a sale to Lactalis is the highest value option for the Co-op, including over the long-term.

“Alongside a strong valuation for the businesses being divested, the sale allows for a full
divestment of the assets by Fonterra, and a faster return of capital to the Co-op’s owners, when
compared with an IPO.

Fonterra Co-operative Group
Page 2

“This, coupled with the firm belief we have in Fonterra’s long-term strategy, gives the Board the
confidence to unanimously recommend this divestment to shareholders for approval,” says Mr
McBride.

Fonterra CEO Miles Hurrell says the sale agreement represents a great outcome for the Co-op.
“As the world’s largest dairy company, Lactalis has the scale required to take these brands and
businesses to the next level. Fonterra farmers will continue to benefit from their success, with
Lactalis to become one of our most significant Ingredients customers.

“At the same time, a divestment of these businesses will allow Fonterra to deliver further value for
farmer shareholders and New Zealand by focusing on our world leading Ingredients and
Foodservice businesses, through which we sell innovative products to more than 100 countries
around the world, from our home base here in New Zealand,” says Mr Hurrell.

Lactalis CEO Emmanuel Besnier says “with this acquisition, we significantly strengthen our
strategy across Oceania, Southeast Asia and the Middle East. Combining the Fonterra consumer
business operations and market leading brands with our existing footprint in Australia and Asia will
allow Lactalis to further grow its position in key markets. I'm delighted to become a key partner to
Fonterra over the long term as well as I'm looking forward to welcoming new teams to the Lactalis
family."

Terms of sale agreement

The divestment comprises the sale of shares in Mainland Group Holdings Limited, a New Zealand
incorporated holding company that is currently owned by Fonterra.

The inclusion of the Bega licences held by Fonterra’s Australian business would be confirmed
once a dispute with Bega Cheese Limited is resolved. If for some reason the Bega licences are not
included in the sale, Fonterra expects to receive a fair value payment from Bega for the licences
which would need to be determined at the time.

Under the terms relating to the sale, Fonterra will continue to supply raw milk, dairy ingredients and
products to the divested businesses under long-term supply agreements.

Alongside shareholder approval, the divestment is conditional on final regulatory approvals being
received from the Overseas Investment Office in New Zealand, the Foreign Investment Review
Board in Australia, as well as relevant competition regulators and foreign direct investment
regulators in certain countries including Kuwait, New Caledonia and Saudi Arabia.

In July 2025, the Australian Competition & Consumer Commission announced it would not oppose
the proposed acquisition by Lactalis in Australia.

The divestment is also conditional on separation of the businesses from Fonterra and no material
adverse change arising before completion.

Subject to satisfaction of all conditions, the transaction is expected to complete in the first half of
the 2026 calendar year.

Shareholder vote and capital return process

Fonterra will now seek farmer shareholder approval to divest the businesses by ordinary resolution
at a Special Meeting to be held in late October or early November.

The Notice of Meeting will be issued in early October and will contain information on the impact of
the divestment on Fonterra’s financial shape as well as the proposed capital return.

Payment of the capital return would be subject to a separate shareholder vote following completion
of the sale and receipt of proceeds in New Zealand. The amount of the capital return would be
confirmed ahead of the capital return shareholder vote.

Fonterra Co-operative Group
Page 3


Fonterra’s outlook

Mr McBride says “the Board’s decision to pursue a divestment followed a strategic review, through
which we examined the context we operate in, our strengths, and how as a Co-op we create value
for farmers.
“By far, we do this best through our Ingredients and Foodservice businesses, which collectively
generate the majority of our returns to shareholders through both the Farmgate Milk Price and
dividends.”

Mr Hurrell says “the targets and policy settings Fonterra released alongside its strategy in
September 2024, including an average Return on Capital of 10-12%, remain achievable if the
divestment progresses.

“Fonterra’s previously announced FY25 earnings guidance of 65-75 cents per share remains
unchanged and our FY26 earnings guidance will be announced as part of the FY25 Annual
Results in September 2025.

“The Co-op expects its FY26 earnings per share to be presented on a continuing operations basis
and exclude the performance of the Consumer and associated businesses during the pre-
completion period.”

With the Special Meeting to occur in late October or early November, Fonterra has deferred its
Annual Meeting from November 2025 to December 2025. A date for the Annual Meeting will be
announced in due course.

Advisers

Fonterra received financial advice from Jarden, Craigs Investment Partners and JP Morgan; and
legal advice from Russell McVeagh and Herbert Smith Freehills Kramer.

ENDS


For further information contact:

Philippa Norman
Fonterra Communications
Phone: +64 21 507 072

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Consumer divestment
information pack
August 2025

22
This presentation contains information on the past performance of certain business units and activities of Fonterra Co-operative Group Limited (“Fonterra”) and its subsidiaries (the “Fonterra
Group”). This information has been extracted (for the purpose of indicating the scope and approximate financial performance of the businesses that have been assessed as in-scope for
potential divestment) by Fonterra from financial statements and internal analysis. The extraction reflects a number of assessments and assumptions. None of (1) the basis of those
assessments and assumptions; (2) the extraction methodology; nor (3) all of the resulting information, has been audited or externally reviewed.
This presentation may also contain forward-looking statements, financial targets, estimates and ambitions (“Forward Statements”), each of which is based on a range of assumptions. None of
the Forward Statements is intended as a forecast, estimate or projection of the outcome that will, or is likely to, eventuate. They should not be taken as forecasts or a guarantee of returns to
shareholders. The Forward Statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual outcomes to be materially different
from the events or results expressed or implied by such Forward Statements. Those risks, uncertainties, assumptions and other important factors are not all within the control of Fonterra or the
Fonterra Group and cannot be predicted by the Fonterra Group. The Forward Statements in this presentation reflect views held only at the date of this presentation.
While all reasonable care has been taken in the preparation of this presentation, none of Fonterra, the Fonterra Group, or any of their respective subsidiaries, affiliates and associated
companies (or any of their respective directors, employees, advisors or agents) (together “Relevant Persons”) makes any representation or gives any assurance or guarantee as to the accuracy
or completeness of any information in this presentation or the likelihood of fulfilment of any Forward Statement or any outcomes expressed or implied in any Forward Statement. Accordingly, to
the maximum extent permitted by law, none of the Relevant Persons accepts any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of
any Forward Statements or for any loss, howsoever arising, from the use of this presentation.
Statements about past performance are not necessarily indicative of future performance.
Except to the extent (if any) as required by applicable law or any applicable Listing Rules, the Relevant Persons disclaim any obligation or undertaking to update any information in this
presentation.
This presentation does not constitute investment advice or opinions, or an inducement, recommendation or offer to buy or sell any securities in Fonterra or the Fonterra Shareholders’ Fund..
Important Information and Disclaimer
Non-GAAP financial information
Fonterra uses several non-GAAP measures when discussing financial performance. Non-GAAP measures are not defined or specified by NZ IFRS.

Fonterra believes that these measures provide useful information as they provide valuable insight on the underlying performance of Fonterra Group. They may be used internally by Fonterra to
evaluate the underlying performance of business units and to analyse trends. These measures are not uniformly defined or utilised by all companies. Accordingly, these measures may not be
comparable with similarly titled measures used by other companies. Non-GAAP financial measures should not be viewed in isolation nor considered as a substitute for measures reported in
accordance with NZ IFRS.

Non-GAAP measures are not subject to audit unless they are included in Fonterra’s audited annual financial statements.

3
•Foodservice covers food that’s
consumed outside the home such
as in restaurants and cafes or via
takeaways. See an overview of
our Foodservice business here.
Foodservice
•Our Ingredients are sold through
digital portal MyNZMP and GDT
and as well as resellers and direct
to customers. See an overview of
our Ingredients business here.
Ingredients
Consumer
•Consumer covers products that
the Co-op makes, packages and
distributes to supermarket chains
and convenience chains plus
general and modern trade stores.
A recap on how Fonterra has created value to date
•Examples of customers: Foodstuffs,
Woolworths, Coles, Aldi, 7-Eleven, Fiji
Dairy, Cargills.
•Examples of products: Fresh milk,
cream, yoghurt, cheese, butter, milk
powder products.
•Examples of customers: Nestlé,
Mars, Premier Nutrition, Want Want.
•Examples of products: Whey
proteins, caseins, lactoferrin, butter,
cheese, WMP, SMP, AMF.
•Examples of customers: McDonald’s,
Yum!, bakeries, cafes and beverage
houses.
•Examples of products: Whipping
cream, IQF mozzarella, cream cheese,
butter sheets, slice on slice cheese.
•In FY24, our Ingredients channel
represented 78.3% of our New
Zealand milk solids sold and
contributed $15.1b in revenue, with a
return on capital of 10.2%
•In FY24, our Foodservice channel
represented 14.2% of our New
Zealand milk solids sold and
contributed $4.1b in revenue, with a
return on capital of 19.6%
•In FY24, our Consumer channel
represented 7.5% of our New
Zealand milk solids sold and
contributed $3.7b in revenue, with a
return on capital of 6.8%

Purchaser:
Key terms of sale agreement:
•Lactalis to purchase Fonterra’s global Consumer business
(excluding Greater China); integrated businesses in
Oceania and Sri Lanka; and Middle East & Africa
Foodservice business.
•Includes long term agreements for Fonterra to supply milk,
ingredients and other products to the divested business
•Potential for purchase price to increase up to $4.220 billion,
if Bega licences held by Fonterra Australia are included.
•If Bega licences are not included in the transaction, Fonterra
to receive a fair value payment from Bega determined at the
time.
•Sale subject to approval from Fonterra shareholders by
ordinary resolution, separation, and regulatory approvals
including OIO in New Zealand and FIRB in Australia.
$3.845 billion
Purchase Price:
Proposed Capital Return:
Date of shareholder vote:
Tax free $2.00
per share
Late October or
Early November
Lactalis
4
Divestment proposal

9.00%
16.30%
10.20%
5.50%
15.70%
19.60%
-0.40%
-3.90%
6.80%
5
•Fonterra’s Ingredients and Foodservice businesses
generate the Farmgate Milk Price and the majority of
the Co-op’s earnings.
•These high performing businesses both have an
average Return on Capital (ROC) above 10%.
•The Consumer business consistently delivers a ROC
below 10%.
•A divestment would allow Fonterra to focus on what it
does best – being a B2B provider of dairy to the world,
from our home base in New Zealand.
•A trade sale of this business is the highest value option
for the Co-op when compared with an IPO.
•Lactalis has the scale required to grow the Consumer
brands.
Channel performance
Why divest?
79.20%
80.40%
78.30%
13.10%13.10%
14.20%
7.70%
6.50%
7.50%
202220232024
IngredientsFoodserviceConsumer
Allocation of milk solids per channel
Return on Capital

Find more out about Lactalis here: https://www.lactalis.com/en/report2024
About Lactalis
Lactalis is a French family-owned dairy company founded in 1933 in Laval,Western France.
3 FLAGSHIP BRANDS
BREAKDOWN IN
REVENUES BY
GEOGRAPHY
2024
BREAKDOWN IN
REVENUES
BY CATEGORY 2024
22.8 BILLION
LITRES OF MILK COLLECTED
WORLDWIDE IN 2024
•They are the world’s largest dairy group with
operations in over 50 countriesin the
Americas, Europe, Africa and Asia Pacific.
•The company employs more than85,500
people with reported revenue of €30.3 billion
in 2024, placing it among the top agri-food
companies globally.
•The group operates nearly 270 production
sites worldwide, making a wide range of
products including cheese, milk, yoghurt,
butter and cream, dairy ingredients, and
nutrition products.
•In Australia, with 2500 employees and more
than 500 farmers, Lactalis offers products
under brands such as President, Galbani,
Pauls, Oak, Ice Break, Jalna, and Kraft.
•Lactalis has the scale required to take
these brands and businesses to the next
level.
6

Fonterra a more focused Co-op, still with global B2B reach
7

Fonterra has a clear plan to deliver outcomes for shareholders
8

Strategic targets hold even if Consumer is divested
9

•Farmer shareholder vote on whether to proceed
with sale to Lactalis isto occur at a Special Meeting
in late October or early November
•Notice of Meeting to be issued in October including
detail on the financial shape of Fonterra post-
divestment
•Fonterra’s Annual Meeting deferred from November
2025 to December 2025
•Subject to receipt of approvals, sale expected to
complete in first half of 2026.
•Capital Return shareholder vote to occur at later
date
•Fonterra’s FY25 earnings guidance unchanged at
65-75 cents per share
•Fonterra’s FY26 earnings guidance to be released
with annual results on 25 September 2025
Next steps
10