increase font size
A Fonterra shareholder says the co-op could face a takeover bid if its share price continues to plummet.
A diehard dairy co-operative champion and Fonterra shareholder is warning that the co-op could face a takeover bid if its share price continues to plummet.
Lloyd Downing, Morrinsville, claims that the co-op's share price could drop below $2/share.
"I have been warning Fonterra directors about this," he told Rural News.
"One of them said to me, 'oh farmers won't allow a takeover'... I replied, look at what happened to Westland Milk."
Hokitika-based Westland Milk was bought by China's Yili Group in 2019 after it ran into high debt and failed to deliver a competitive milk price to farmer shareholders.
Downing says some farmers, like him, are now questioning whether the new capital structure for Fonterra is working.
However, Jarden head of research Ari Dekker doesn't believe Fonterra will face a takeover bid anytime soon.
"The co-op will not be subject to a takeover offer," Dekker told Rural News. "The share price has been impacted recently by a 50% capital return."
Fonterra's share price has been having a rollercoaster ride in recent years. Five years ago, the co-op's share price was around $5.40/shar. Last week, it was sitting at $2.50/share.
Fonterra farmers need to buy shares before they can supply milk. Farmers who bought their shares at around $5-$6 each five years ago have seen their value halved.
In recent days, Fonterra shares have fluctuated by 20c. The share price rose when it announced a strong earnings guidance but lost the gains when the co-op announced another drop in its forecast milk price for the season.
The co-op also announced a $50 million share buyback scheme, which it hopes will prop up the share price.
Dekker isn't surprised by the share buyback, which will run for 12 months. He says $50m isn't a meaningful amount of capital for the co-operative and the balane sheet is in solid shape. "While value can be difficult to gauge, the gap between the Fonterra share price and the price units trade at does support the case to buy back Fonterra shares at these sorts of levels," he says.
Dekker points out that buybacks can be used when there is surplus capital "but Fonterra is probably also trying to signal that it views the shares as a bit undervalued".
Dekker says the earnings outlook is currently robust for Fonterra, in contrast with the trajectory on milk price. He says the strong earnings guidance should provide some value support for the shares.
A Māori-owned agribusiness helping to turn a long-standing animal welfare and waste issue into a high-value protein stream for the dairy and red meat sectors wants more industry support.
Waikato farmer, and Owl Farm demonstration manager, Jo Sheridan is the 2025 Fonterra Dairy Woman of the Year.
As part of preparing for a potential IPO in relation to the divestment process for its global Consumer business and integrated businesses Fonterra Oceania and Sri Lanka, Fonterra has named Anne Templeman-Jones as chair-elect of the Audit and Risk Committee for the Mainland Group board.
Fonterra says it takes the ongoing threat of 'adverse cyber action' extremely seriously.
Despite the turmoil in global markets, Fonterra is continuing with a dual track process to divest its multi-billion dollars consumer businesses.
Sheep milk powder and products exporter Maui Milk is partnering with one of China’s biggest dairy players to boost its market presence.
Ngai Tahu's legal action seeking self-determination (rangatiratanga) over fresh water could have huge implications for the future of farming, the viability of farming businesses, and our wider rural communities, says Federated Farmers national vice president Colin Hurst.
A Māori-owned agribusiness helping to turn a long-standing animal welfare and waste issue into a high-value protein stream for the dairy and red meat sectors wants more industry support.
Only this season’s $10/kgMS bumper payout has saved some dairy farms along the Taranaki coast from absolute disaster due to the present drought – dubbed as one of the worst ever for some.
A survey of contract milkers in the dairy sector has revealed some shocking statistics - 43% of respondents reported abusive behaviour from a farm owner and a whopping 72% suffered a mental and/or financial setback in the role.
The 2025 game bird season is underway with Hawke’s Bay and Southland reporting the ideal weather conditions for hunters – rain and wind.
