Fonterra farmers and shareholders will vote next month on a proposed $2.00 per share capital return, following the co-operative’s planned sale of its global consumer business, Mainland Group, to dairy giant Lactalis.

If approved, the return would see about $3.2 billion paid back to shareholders and unit holders, once the sale is completed. Fonterra released formal meeting papers on Thursday to help shareholders understand what the proposal means and how to vote.

A virtual Special Meeting will be held at 10.30am on Thursday, 19 February, where shareholders will be asked to approve the scheme that would allow the capital to be returned.

Fonterra said the proposal is designed to return value to farmers as quickly as possible after the sale goes through.

Sale process progressing

The sale of Mainland Group is still subject to final regulatory approvals and the separation of the business from Fonterra. However, the co-operative confirmed that Lactalis has now received approval from Australia’s Foreign Investment Review Board, clearing a key hurdle.

Fonterra said separation work is tracking well and, if remaining approvals are received on time, the transaction is expected to be completed in the first quarter of 2026.

Holding the shareholder vote in February would allow the capital return to be paid shortly after the sale is finalised.

How the capital return will work

The proposed return will be carried out through a court-approved process and will involve a temporary share buyback, followed by a cancellation and subdivision of shares.

Fonterra said this structure ensures shareholders will hold the same number of shares after the payment as they did before, meaning minimum shareholding requirements and voting rights will not be affected.

The co-operative has indicated the payment is expected to be tax-free, but shareholders and unit holders are being advised to seek independent tax advice based on their own circumstances.

What happens next

For the capital return to proceed, at least 75 percent of votes cast at the Special Meeting must support the proposal.

If approved, Fonterra will then seek final court approval once the sale to Lactalis is completed.

The record date for eligibility will be set within five business days before the payment is made.

Fonterra said detailed information, including explanatory notes and tax guidance, is available in the Notice of Meeting released to shareholders.