Fonterra’s Mainland Spin-Off Could Be Worth Up to $3 Billion, Says Forsyth Barr

Highlights:

• Forsyth Barr values Fonterra’s upcoming Mainland Group spin-off between $2.5 billion and $3 billion, with the higher figure more likely via a trade sale.
• Fonterra Co-operative Group Limited (NZX: FCG) is running a dual-track process, considering both a trade sale and an IPO for its consumer business.
• If listed, Mainland Group would be led by Liz Coutts and Rene Dedoncker, and include iconic brands like Anchor, Mainland, and Western Star.

Valuation of Mainland Group Estimated Between $2.5 billion and $3 billion

Fonterra Co-operative Group Limited (NZX: FCG) could see its upcoming spin-off, Mainland Group, valued between $2.5 billion and $3 billion, according to investment firm Forsyth Barr. At the time of writing, analysts believe the top-end valuation is more attainable through a direct trade sale rather than a public listing. The dairy giant is currently exploring a dual-track process to divest its consumer business, which includes its operations across Australia.

Dual-Track Strategy for Consumer Division Divestment

The dual-track approach gives Fonterra the flexibility to either proceed with an initial public offering (IPO) or accept a suitable offer through a trade sale. Non-binding proposals from interested parties are currently under review. Should Fonterra proceed with an IPO, the newly listed entity—likely to be dual-listed—will be led by chair Liz Coutts and CEO Rene Dedoncker. The consumer division includes well-known brands such as Mainland, Western Star, and Anchor.

IPO Option Could Offer Strategic Independence

While an IPO may not fetch the same value as a trade deal, it would provide Mainland Group greater autonomy and potential for long-term growth in public markets. Forsyth Barr notes that a successful public listing could offer Fonterra flexibility in retaining a stake or structuring the spin-off to appeal to retail and institutional investors. The decision comes amid ongoing efforts by Fonterra to streamline its portfolio and focus on high-margin businesses. Investors are closely watching how the dual-track process unfolds, given the strategic importance and scale of the consumer business within Fonterra’s global footprint.

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