Friday, March 29, 2024

Beingmate bleeding still hurts

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Fonterra has been unable to sell all its 18.8% shareholding in Beingmate Baby and Child and has resorted to a slow exit via the Shenzhen Stock Exchange.
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Under the stock exchange rules Fonterra had to announce its revised intention.

The rules allow sale of up to 1% every 90 days directly on the exchange or up to 2% in a single block every 90 days. 

Trades greater than 5% can be made to an individual party in an off-market transaction.

Beingmate shares are selling for just over 5 yuan, valuing Fonterra’s stake at around $220 million, compared with the $755m paid at 18 yuan a share in March 2015.

The book value of the stake was reduced by $405m last year and now sits at $244m, raising the possibility of a further write-down in the 2019 accounts to be released next month.

Fonterra chief executive Miles Hurrell said the Beingmate shareholding is now regarded as a financial investment only after various related agreements were cancelled or amended.

“From here, it’s about making pragmatic decisions to get the best outcome from our Beingmate holding.

“China will always be one of our most important markets.

“We have a strong business there and are still very much focused on the areas in China where we can succeed.”

The sale of the Beingmate stake was one plank of a portfolio review and divestment exercise to save $800m after Fonterra’s first-ever financial loss in the 2018 financial year.

It remains to be seen if the company achieved that goal in the 2019 year.

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