New Zealand’s Fonterra exits pharma business to CVC

The investment will be made by CVC Strategic Opportunities II, a EUR4.6 billion ($5 billion) fund that targets long-term capital appreciation opportunities that fall outside of the firm’s private equity strategies. Fonterra said in a statement that the sale was part of efforts to cut debt by NZ$1 billion. The company subsequently announced a net loss of NZ$605 million for the 2019 financial year.

DFE is a pharmaceutical industry supplier, specializing in ingredients for drugs consumed in powder and tablet form. These ingredients are inactive substances used to bind, bulk and aid the processing of active ingredients. The company is headquartered in Germany and has production facilities in Germany, New Zealand, India, and the Netherlands. It has customers in more than 100 countries.

The transaction will be structured as a NZ$537 million cash payment plus a vendor loan of NZ$96 million for a term of up to 15 years. An additional NZ$44 million will be paid if certain performance targets are met. Fonterra will continue to supply lactose to DFE.

Fonterra has made several divestments of non-core assets as it looks to simplify its business. The disappointing financial performance in 2019 was largely due to write-downs of NZ$826 million as the company exited its business in Venezuela, closed a manufacturing plant in Australia, and launched strategic reviews of its dairy joint venture in Brazil and its farming operations in China.

The company generated sales of NZ$20.1 billion, down 2% year-on-year, as the net loss widened from NZ$196 million to NZ$605 million.

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• Topics
• Australasia
• Buyouts
• Healthcare
• Consumer
• New Zealand
• CVC Capital Partners