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Russell McVeagh advises on Fonterra's sale of China farms

Home Insights Russell McVeagh advises on Fonterra's sale of China farms

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Published on: October 06, 2020


Russell McVeagh has advised Fonterra on its sale of its China farms, which has consisted of two significant offshore transactions totalling $555 million.

The Russell McVeagh team, led by partner Ben Paterson, together with solicitors Tori Sellwood and Sophie Mentink, worked closely alongside Fonterra's in-house legal team led by Director of Legal Andrew Cordner, together with Senior Corporate Counsel Felipe Rojas, and Fonterra’s M&A team led by Director, M&A and Business Development Sarah Judkins, together with M&A Manager Sam Weir.

Russell McVeagh's team assisted Fonterra with negotiating the two deals, which involved:

  • Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited (Youran), agreeing to purchase Fonterra’s two farming-hubs in Ying and Yutian for $513 million; and
  • Fonterra separately agreeing to sell its 85 per cent interest in its Hangu farm to Beijing Sanyuan Venture Capital Co., Ltd. for $42 million.

“Negotiations were undertaken in challenging circumstances given the global pandemic and restrictions on international travel, and we are very pleased to have been able to take a lead role in assisting Fonterra to work through the complexities of the sale, which will allow Fonterra to further focus on its strategic priorities,” said Mr Paterson.

Andrew Cordner, Fonterra's Director of Legal said, “This is one of the most complex and challenging M&A deals that Fonterra has undertaken for some time and would have been so even without the impact and challenges of COVID-19 on the due diligence and negotiation process. Thank you to Ben and team at Russell McVeagh for their agility, calmness under pressure, and collaborative approach which has got us to this good strategic outcome for our Co-operative. Selling our China farms is in line with our strategy of focusing on our NZ farmers’ milk and will also allow us to focus on strengthening our Foodservice, Consumer Brands and Ingredients businesses in China which remains one of Fonterra’s most important strategic markets.”

Completion of the sale, is subject to anti-trust clearance and other regulatory approvals in China.

More information is available here.

For further information, please contact:
Joanna Comerford
Head of Communications
[email protected]
D  +64 4 819 7520

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