Photo: 123rf / Supplied images
Fonterra's farmer shareholders have voted overwhelmingly in favour of the sale of the brands like Mainland and Anchor to a French company.
More than 88 percent of the votes cast at a special meeting backed the $4.2 billion sale to French dairy giant Lactalis.
The threshold required to approve the sale was more than 50 percent. Chairman Peter McBride said the board was encouraged by the "strong mandate".
"We've been pleased to see so many farmers joining in the discussions since the start of this process in May last year when we first announced the decision to explore divestment options, and especially over the past month or so when the full details have been available.
"It helps to demonstrate one of the key things that sets us apart from most other processors - our farmers have a direct say in the future of their Co-operative, and they've made the most of that opportunity."
ASB Bank estimated the sale proceeds would ultimately be worth about $4.5b to the economy, with farmer shareholders receiving an average tax-free payout of about $392,000 if the sale went ahead.
The sale to the world's biggest dairy group, French-based Lactalis, is the final step in Fonterra's transition to a slimmed-down New Zealand-based supplier of raw ingredients and high-value products to other manufacturers.
In an almost instant reaction, NZ First leader Winston Peters described the decision as "utter madness" and "economic self-sabotage".
Peters has been publicly urging farmers to vote against the proposal.
"This is an outrageous short-sighted sugar hit that is just giving away New Zealand's added value to a company from a major EU country. There is now no long term security for New Zealand's farmers," he said on X.
"Three years after this deal starts, Lactalis can begin the three year notice to terminate the milk supply to these brands. Six years is meaningless for a long-term exporter. When it's over, it really is over.
"Meanwhile, Lactalis secures ten years of raw milk for its own consumer brands. It is astonishing that business commentators do not see the irony of this."
'A powerful green light'
A dairy analyst says the approval of the sale of Fonterra's consumer brands, is democracy in action.
Rabobank dairy analyst Emma Higgins said while a strong vote in favour of the sale was expected, it couldn't be known for sure.
"Fonterra farmers clearly have spoken, nearly 90 percent of those votes have backed the sale and it's really giving a powerful green light to reshape the cooperative's future."
Higgins told Midday Report the cash from the sale could strengthen communities throughout the country.
Federated Farmers' national dairy chairperson Karkl Dean said many farmers will look to invest the money they'll get from the sale back into their farms.
He added that today's result was a strong and obvious decision to sell.
Fonterra chairperson Peter McBride Photo: RNZ/Marika Khabazi
Decision not taken lightly - McBride
McBride said the decision to divest the Mainland Group businesses was significant and one the board did not take lightly.
"We have examined the strategic context we operate in, our strengths and how as a Co-op we create value for our farmer owners.
"The divestment will usher in an exciting new phase for the Co-op. We will be able to focus Fonterra's energy and efforts on where we do our best work. We will have a simplified and more focused business, the value of which cannot be overstated."
Completion of the deal remains subject to securing some regulatory approvals and the separation of Mainland Group business from Fonterra, both of which are underway.
Subject to these steps being completed, Fonterra expects the transaction to complete in the first half of the 2026 calendar year.
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