Three-Way Contest for $2B Fonterra Dairy Sale

Fonterra is pushing ahead with the $2 billion-plus sale of its Mainland Group, entering a critical final stage in an effort to achieve the best outcome while managing intense competition and possible complications.

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Pick & Scroll News
July 23, 2025

Fonterra is pushing ahead with the $2 billion-plus sale of its Mainland Group, entering a critical final stage in an effort to achieve the best outcome while managing intense competition and possible complications. The dairy company aims to complete the divestment smoothly, but faces potential legal issues and regulatory holdups depending on the winning bidder.


Mainland Group includes Fonterra's Oceania food service segment and a portfolio of consumer and ingredient brands across Australia, Asia, Africa and the Middle East. Household labels like Western Star, Anchor and Perfect Italiano are part of the offering, helping drive significant buyer interest. With around $200 million in annual EBIT, the business is a key strategic opportunity for international dairy players.


The process has now moved into a “black box” due diligence round, where shortlisted bidders gain access to internal financial and operational data previously withheld. This exclusive phase is expected to run for 10 to 14 days and typically features one preferred bidder. Final contenders include France’s Lactalis, Japan’s Meiji Holdings and a joint bid from Bega Group and FrieslandCampina. Each group is receiving guidance from major investment banks throughout the process.


Lactalis appears to be in the lead, having secured approval from Australia's ACCC and offering a strong match with its existing local operations. Bega Group, while offering the best operational fit, faces hurdles. It needs to raise capital and is in dispute with Fonterra over current brand arrangements. If Bega is unsuccessful, legal action is likely. If it succeeds, it may still face delays while awaiting regulatory approval.


The outcome of the sale could reshape the global dairy industry. The deal promises growth opportunities and new market access, but also brings risk of disruption that could delay or complicate its completion. Industry observers are closely watching the next steps and their potential impact on Australia's food and consumer goods landscape.

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