Fonterra offloads pharmaceutical business, cuts debt

New Zealand dairy giant Fonterra (ASX: FSF) has offloaded its shareholding in pharmaceutical supplier DPE Pharma as it reorganises its businesses to cut debt.

The company sold its 50 per cent shareholding in the international suppliier of dry inhalation powders for $589 million (NZD$633 million), ending its association with milk-based pharmaceuticals.

The purchaser was capital firm CVC Strategic Opportunities wich has agreed to continue lactose purchases from Fonterra for a period.

Fonterra has sold a number of non-core assets including its Tip Top ice cream business in recent months, with the DPE Pharma sale bringing proceeds to more than $930 million.

The cash will reduce the company’s debt.

Fonterra CEO Miles Hurrell said today: “We set ourselves a tough initial target for debt reduction and we are pleased with the progress we are making.

“It is an important milestone in our co-op’s plan to lift our business performance.”

DPE Pharma, which was owned by Fonterra and Dutch based Royal Friesland Campina, operates globally.

It provides lactose refined for use as a component of dry inhalation medications.

The DPE Pharma brand was created in 2011, and included Fonterra’s lactose business in New Zealand.

Fonterra identified the business for sale due to the high level of capital investment needed to grow the business.

Picture: DPE Pharma

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