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Fonterra And Bonlac Create Major Group

Monday 1 July, 2002

Fonterra And Bonlac Create Major Australasian Dairy Products Group

Fonterra Co-operative Group Limited and Melbourne-based Bonlac Foods Limited have agreed to merge their consumer food products operations in Australia and New Zealand.

The merger creates a strong and broadly-based Australasian manufacturer and marketer with successful brands in dairy and associated food categories and annual sales of more than NZ$2.3 billion (A$2.0 billion). It brings together the Mainland and Tip Top businesses in New Zealand with the Bonland Dairies and Peters and Brownes businesses in Australia, under the name of Australasian Food Holdings (Australia) Pty Ltd (AFHL), employing approximately 4,000 people.

The merged group will market leading brands such as Mainland, Tip Top Ice Cream, Meadowfresh, Tararua, Galaxy, Ferndale, Huttons, Kiwi, Bega, Bodalla, Perfect Italiano, Western Star, Cadbury Ice Cream and Brownes, in Australia, New Zealand and Oceania. Its brand portfolio will cover milk, ice cream, cheese, butter, yoghurt, processed meats and convenience foods.

Fonterra now holds the majority of shares in the merged group and Bonlac Foods Limited, Aorangi Laboratories Limited, Calpa Pty Limited are minority shareholders. The shareholdings in the merged group are based on an independent valuation of the businesses being brought together.

The Chief Executive Officer of Fonterra, Mr Craig Norgate, said the merger creates a strong platform for future growth in Australasia.

“This is a very significant move that contributes to our objective to create the greatest value for Fonterra’s shareholders,” Mr Norgate said. “The merged operation will be able to achieve further marketing and distribution strength that will benefit the organisation immediately. Most importantly for Fonterra, the merger is a significant step in delivering on our aspirations for our home market of Australia and New Zealand. This is a key priority as we work to deliver the benefits promised to our shareholders in the run-up to Fonterra’s formation.

“The new business will be strong operationally and financially, with a portfolio of market-leading brands and with excellent management. It will be ideally placed to generate good returns for its owners and to meet their growth aspirations. I am delighted that the parties involved have been able to reach agreement on the merger.

“This transaction could not have taken place without the Fonterra merger in October 2001. It is the first major initiative we have generated entirely since the company was created, whilst we have progressed a number of other initiatives in Europe, the Americas and Asia over the same period.”

Mr Norgate said AFHL is now an Australian-registered company, with its executive team initially remaining in their current locations on both sides of the Tasman.

END

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