Street Talk understands Fonterra Co-operative Group will mail out formal request for proposals to investment banks next week, having told shareholders about its reviews on Thursday.
Bankers reckon there will be two separate mandates up for grabs; one for its Chilean business and the other to float the Australian arm.
Quite literally New Zealand’s cash cow, Fonterra generated $NZ21.1 billion (about $20.4 billion) in revenue last financial year. And the two units up for sale represent a sizeable portion.
Its Chilean business, which is the biggest slice of the Latin American operations, posted about $NZ1 billion in revenue and $NZ285 million in gross profit last year. Fonterra’s management has talked up its improving margins and profitability, but is getting out as the stand-alone business isn’t directly connected to its home turf of New Zealand.
For the Australian business, Fonterra has flagged an IPO but wants to retain a meaningful stake given Australia remains an important export market for its New Zealand milk. The Australian unit did $NZ1.7 billion in revenue last financial year and runs eight manufacturing sites.
It’s sure to mean a few busy weeks ahead for consumer banks – in Australia, Latin America and back across the Tasman.
Earlier this year Fonterra sold German nutrition startup foodspring to Mars, netting itself $NZ64 million. Last year’s divestment was a much bigger $NZ555 million sale of its China farms.
Fonterra Australia’s brands include Western Star, Perfect Italiano, Bega, Mainland and Australian Dairies. For the last three years, Fonterra has worked on making the Australian operations more efficient.
An IPO could value the Aussie unit at $1 billion to $2 billion.
Sources said Jarden could nab a role in the latest culling. But Fonterra is likely to need more than one bank.