What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Kiwis feel a surge of pride when they see the old Anchor brand when they’re overseas, but national pride isn’t exactly the last word in financial analysis.
A better yardstick is the opinion of the likes of Forsyth Barr senior analyst Matt Montgomerie and analyst Ben Crozier, who refer to the assets sold as “the poor-performing Mainland Group”.
They view Fonterra as a “much higher-quality business” without it. The Consumer business has long been a problem area for Fonterra and its return on capital is typically abysmal compared with the co-op’s Foodservice and Ingredients arms.
Fonterra’s core strength is clearly milk processing—not branded consumer products.
Read More:
- Fonterra sale could deliver $3.2b windfall to farmers
- Why Fonterra accepted defeat in the dairy aisle
- "Our" business?
