Core Viewpoint - Fonterra has announced a significant transaction, selling its global consumer goods business, including the "Anchor" brand, to French dairy giant Lactalis for approximately NZD 3.845 billion (around RMB 16 billion), indicating a strategic shift away from the To C market towards a focus on To B operations [4][5][6]. Group 1: Transaction Details - The sale includes Fonterra's global consumer goods business (excluding Greater China) and various well-known dairy brands such as Anchor, Mainland, and Anlene [6][7]. - Fonterra's board had previously indicated intentions to divest its consumer goods segment, with the chairman stating that selling to Lactalis was the most valuable option after evaluating trade sales and IPOs [8][10]. - Following the sale, Fonterra will continue to supply raw milk and dairy ingredients to the divested brands under a long-term supply agreement, ensuring that New Zealand dairy farmers' milk remains in products like Anchor butter [11][12]. Group 2: Business Performance - Fonterra's consumer goods segment has struggled, particularly in Greater China, where it reported a revenue of NZD 394 million (approximately RMB 1.68 billion) and a tax loss of NZD 15 million for the 2024 fiscal year [13][14]. - In contrast, the professional food service business generated NZD 2.377 billion (approximately RMB 10.133 billion) in revenue, with a tax profit of NZD 299 million, highlighting the profitability of the To B segment [14]. Group 3: Strategic Shift - Fonterra has been streamlining its operations, having previously exited non-core businesses, such as selling its farms in China for approximately RMB 2.5 billion in 2020 [16]. - The new CEO has emphasized a focus on becoming a leading B2B dairy supplier, aiming to leverage New Zealand's milk to create innovative products for over 100 countries [16]. - The market reacted positively to the announcement, with Fonterra's stock price rising 15%, indicating investor support for the strategic shift [16]. Group 4: Greater China Market Considerations - Notably, the sale excludes the Greater China market, where Fonterra retains its consumer brands, indicating the region's strategic importance [18][21]. - The integration of the Anchor consumer goods team with the professional food service team in China aims to avoid brand confusion and leverage shared resources [18][19]. - The Greater China food service business has shown strong performance, contributing over 58% of Fonterra's global food service revenue, underscoring the potential of the consumer segment in this market [21]. Group 5: Challenges Ahead - The merger of consumer and food service teams presents challenges in coordinating production and marketing strategies, as the two segments have different operational models [23][24]. - The competitive landscape in China's high-margin dairy market is intensifying, with local brands increasingly entering the B2B space, posing additional challenges for Fonterra [25].

Core Viewpoint - Fonterra is selling its global consumer business (excluding Greater China) and various food service operations to Lactalis, marking a significant strategic move for both companies [1][4]. Group 1: Transaction Details - The sale includes Fonterra's global consumer business, food service and ingredient operations in Oceania and Sri Lanka, as well as food service operations in the Middle East and Africa [1]. - The base enterprise value of the transaction is NZD 3.845 billion, with potential additional value from Bega licenses held by Fonterra's Australian business, which could increase the total enterprise value to NZD 4.220 billion [4]. Group 2: Strategic Implications - Fonterra will continue to supply milk and other products to the divested businesses, ensuring that New Zealand farmers' milk remains in iconic dairy brands such as Anchor and Mainland [4]. - Lactalis aims to strengthen its strategic position in Oceania, Southeast Asia, and the Middle East through this acquisition, enhancing its market presence by combining Fonterra's consumer business with its existing operations in Australia and Asia [5].