Fonterra shareholders say ‘yes please’ to proceeds of Mainland brands sale

Thursday, 19 February 2026

Almost 99% of Fonterra Co-operative Group shareholders this morning voted to receive the tax free capital return of $3.2 billion from the sale of the company’s global consumer and associated businesses, Mainland Group, to Lactalis.

The return breaks down to about $2 per share, and there are 1.6b shares on issue. Farmers will receive an average of $360,000 each based on the average shareholding.

The mechanics of how this will work are complex, involving a share buyback, cancellation and subdivision by way of a Court-approved scheme of arrangement, but are designed to ensure that each shareholder’s holding remains proportionally the same, and their minimum shareholding requirements as suppliers to the company are also unaffected.

Fonterra has obtained a binding tax ruling from Inland Revenue that the amount paid to shareholders will be treated as a return of capital and not as a dividend for New Zealand income tax purposes, meaning the windfall will not be taxed.

There were no questions about the sole resolution at this morning’s online meeting - that shareholders approve the scheme of arrangement to return capital to shareholders following the sale of Mainland Group to Lactalis.

The vote on the capital return follows a special meeting in October in which almost 89% of farmer-shareholders voted to approve the divestment of the brands business to Lactalis.

At least 75% of shareholders must approve the resolution after which Fonterra will apply to the High Court to make the payment, expected at the end of March.

As for the brands sale itself, Fonterra chairperson Peter McBride recently told shareholders it remained subject to certain regulatory approvals and separation of the business from Fonterra.

Meanwhile, Lactalis has received approval from Australia’s Foreign Investment Review Board (FIRB) to buy the Mainland Group business.