When its Beingmate shareholding is divested and a half share of DFE Pharma is sold, Fonterra should reach its $800m reduction target by July 31.
The Beingmate stake has a market value of about $280m and the DFE share about $200m, based on annual sales figures.
Chief executive Miles Hurrell has therefore made a good start on promised financial reforms of substantial debt reduction, cuts in capital and operational expenditure and 7%-plus return on capital invested by farmer-shareholders and unit holders.
Froneri, owned by Nestle and PAI Partners, a European private equity investor, has annual sales in excess of $4 billion and operates in 22 countries including Australia, where PAI acquired Peters, the market leader, in 2014.
Froneri is the second-largest ice cream company in Europe and the third-largest in the world. It was formed three years ago, is based in London and employs more than 10,000 people.
All Tip Top managers and staff will be employed by Froneri from the sale competition date of May 31.
Froneri chief executive Ibrahim Najafi said Tip Top has always been admired as an iconic brand with a long, proud history.
“Our vision is to build the world’s best ice cream company.
“An important part of our strategy is to develop local market successes and roll them out across our other markets.”
The Tip Top name and its operations, including the Auckland factory site at Mount Wellington, will be maintained.
“We intend to invest in the Tip Top brands, products and manufacturing facility to ensure we continue to excite the market and New Zealanders with delicious, high-quality ice cream made from local fresh milk and cream.”
Froneri brands under licence include Cadbury, Oreo, KitKat, Movenpick Toblerone, Smarties, Magnum and Milo ice creams.
Fonterra will keep the Kapiti ice cream and cheese brands. The ice creams will continue to be made by Tip Top under licence.
Hurrell said the strength of the Tip Top brand and products and its place in NZ were recognised in the number and quality of the bids received.
Fonterra will supply milk to the new owners.
“It’s been a privilege being the guardians of Tip Top but it’s time to hand the baton to new owners.
“The well-loved brand needs continuing investment and focused ownership to be sustainable for generations to come. It’s not something we’re in a position to do right now.”
Tip Top has been part of Fonterra since 2001.
After formation in 1936, it went to Goodman Fielder in 1987, Heinz in 1992, West Australia’s Peters and Brownes in 1997 and Kiwi Dairy in 2000.
