Dairy giant Fonterra has sold its 50 percent share of joint venture DFE Pharma as it looks to pay down debt and turn around its financial woes.
The co-op has been carrying out a strategic review of its assets, after posting a $196 million dollar loss for the year ending July 2018.
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In May it sold iconic ice cream company Tip Top to UK-based Froneri for $380 million, and it has now sold its share in DFE Pharma for $633 million.
DFE Pharma was a 50/50 joint venture between Fonterra and Royal Friesland Campina, established in 2006.
It supplied pharmaceutical excipients, which are used as a carrier agent in medicines such as tablets and powder inhalers.
Fonterra CEO Miles Hurrell said cash from the sale, along with proceeds from other asset sales across the year including Tip Top, would give the co-op over $1 billion available for debt reduction.
"We set ourselves a tough initial target for debt reduction and we are pleased with the progress we are making. It's an important milestone in our co-op's plan to lift our business performance."
Fonterra advised in March that it was reviewing its share of DFE Pharma.
"DFE Pharma was identified for sale due to the substantial capital required for its future growth," said Hurrell.
Fonterra's share of DFE Pharma has been sold to CVC Strategic Opportunities II, a fund managed by CVC Capital Partners.
Hurrell said Fonterra was pleased to have secured a good sale price and will stay committed to the ongoing success of the DFE Pharma business through a long-term supply agreement and an interest-accruing vendor loan.
"A big part of the success of DFE Pharma has been the high-quality lactose produced by the team at Fonterra's Kapuni site in Taranaki, and it is a good outcome to be able to continue to supply this."
The sale is subject to receipt of regulatory approvals from competition authorities.
Fonterra will report its audited financial results for the 2019 financial year (FY19) ended 31 July 2019 on Thursday.
It earlier flagged a loss of up to $675 million due to write-downs on assets.