The Country 25/08/25: Peter McBride talks to Jamie Mackay

The Chairman of Fonterra on the Lactalis deal.

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Episode Transcript

Speaker 1 (00:00):
Let's kick it off with Peter McBride, chairman of Fonterra.
Big news out on Friday that you've got an offer
from Lactalis, the French dairy giant, two dollars a year
back to the farmers three point eight four or five
billion dollars for your consumer brands. What's the feedback been
from the farmers.

Speaker 2 (00:18):
Peter, Well, to me, it's been overwhelmingly positive. Jamie, I
obviously get more positive messages than I would negative, but
certainly overwhelmingly positive. You know, there'll be some farmers that
are struggling with it, and like I mentioned in the media,
you know, the head will be fighting with their heart
because there's been a long term investment for them over

(00:41):
many years, so it is an emotional attachment to the brain.

Speaker 1 (00:44):
Well, there are some iconic consumer brands you're selling, and
there has been criticism in some quarters about that. But
you guys are saying you can deliver more profit and
better returns for your farmer's shareholders if you divest yourself
from the consumer brands. But remember you're still selling the
raw material to those people.

Speaker 2 (01:03):
Yeah, that's right, and I mean it's becoming more apparent
that milk is becoming more and more scarce than us
on and people really value our milk for its functional value,
you know, And so it's important the long term supply
agrament back collect the lease. But just as importantly, you know,

(01:24):
the other skills resource our farmers is their capital. So
you know, we can earn a lot more on the
invested capital if we keep investing more into advanced ingredients
and food service.

Speaker 1 (01:35):
You are dangling a big carrot in front of them.
Two dollars per share. This is going to send something
like three point two billion dollars sloshing around in the economy.
A lot of it will we use, no doubt, to
pay down debt, but there's going to be some of
that spent. I'd imagine a reasonable portion of that spent
on other things investment, increasing productivity, buying new tractors, you

(01:59):
name it.

Speaker 2 (02:00):
Yeah, I think it'll be god for regional New Zealand.
And I think New Zealand needs it right now to
be blunt, So that's positive. I think in terms of carrot,
we would need to have a better use for that
capital right now, which we don't. We need to look
at our levels of debt, We need to be appropriately
geared and so really we're returning their capital back to them.

(02:24):
So we're going to have more investments to make, similar
to what we announced in eden Dale in at start Home.
So there's more to come, but it's just about having
a balanced approach to our overall debt profile and investment.

Speaker 1 (02:39):
Okay. And the time frame from here on in. The
farmers are going to vote and win October November.

Speaker 2 (02:44):
Yeah, Pheus of October, so you know we're obviously reaching
out to them now. We're going to be having a
series of meetings around the country and yeah, we're looking
forward to it.

Speaker 1 (02:52):
Were there any other serious suitors? I call them lac tarlas.
I've got that round the wrong way, haven't I what
is the correct pronunciation, Peter lactalis lactalis? Okay, I wasn't
a mile away? Was there anyone was? Was this a
one horse race?

Speaker 2 (03:06):
No? No, there are other bitters. Yeah, and we still
had the IPO option in our back pocket, but by
far and away, this was the cleanest deal. Obviously, the
number is important, and it's a. It's a. I think
it's an outstanding result and I think, you know, our
guys have done an incredible job of the steal.

Speaker 1 (03:25):
Providing it gets farmer shareholder approval, and I was at
a function in Tapooke on Friday night, spoke to a
lot of key we for it growers and a number
of dairy farmers and they were all in favor of it.
I know that's a very small sample from just the
Bay of Plenty, but providing this gets voted through, gets
the numbers needed. What is the time frame? When do

(03:47):
you when do you ink the deal? When does the
money change hands?

Speaker 2 (03:50):
Har be sometime in the new year, you know, in
the late autumn and that sort of time frame. It
will depend on the regulatory approval process, so that'll take
a little while. So you know, our part of it,
you know, will be obviously the side of Christmas and
then you know, we've just got to work our way
through the rest of the approval processes.

Speaker 1 (04:09):
I'm going to be chatting to Bruce Cameron shortly on
the show, another former chairman of Zesprey and a dairy
farmer and a Kiwi fruit growers. More than one person
has mentioned to me Peter mcbriden, I know you're a
quietly spoken, reasonably humble man, but success seems to follow
you around in corporate agribusiness in this country.

Speaker 2 (04:31):
I can't really comment on that, Jamie, that's very kind.
I've been chatting the Bruce today actually, so it'd be
interesting to get his feedback. But I appreciate the kind comments.
I think you know, for me, what motivates me is
you know what's best for New Zealand growers and farmers,
and you know, with Fonterier and Zespri in particular, you know,

(04:53):
I have a really you know, strong focus on performance
and I think you know, I think you know, for Fonterira,
we're actually going to really hit our strips now, so
it's exciting.

Speaker 1 (05:04):
You've certainly turned the good ship Fonterra around from the
dark old days of Miles Hurrell's predecessor. But we won't
relitigate history. Peter McBride. Always appreciate your time here on
the country and I hope success keeps following you around.

Speaker 2 (05:19):
Thanks, Jamie, appreciate it.