Fonterra May Buy Back Shareholders’ Fund in Structural Overhaul
- Static milk supply a risk to farmer control of dairy giant
- Vote on new capital structure likely to happen in November
Photographer: Brendon O'Hagan/Bloomberg
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Fonterra Cooperative Group, the world’s biggest dairy exporter, is proposing an overhaul of its capital structure that may see its New Zealand farmer-shareholders buy back the listed Fonterra Shareholders’ Fund.
The fund, which has a market capitalization of around NZ$493 million ($356 million), would either be capped or bought back under the Fonterra board’s preferred option, the Auckland-based dairy giant said on Thursday. The company is concerned that stagnant milk supply will result in the fund becoming too large, potentially jeopardizing farmer control.