Fonterra pursues court clarification on Bega licensing

AUSTRALIA – Fonterra has initiated legal proceedings against Australian dairy company Bega in the Supreme Court of New South Wales to clarify the terms of their trademark licensing agreement.

The legal action comes as Fonterra advances plans to sell its Oceania assets, a process announced in May 2024 as part of its broader strategic realignment.

The court proceedings seek a declaration that the pending asset sale does not interfere with Fonterra’s existing licensing arrangement with Bega.

Under the current agreement, Fonterra packs Bega-branded products, including its popular snacking range featuring cheese and crackers.

Bega acknowledged the legal action, clarifying that Fonterra is not seeking damages or proposing any modifications to existing agreements.

According to Fonterra, the move is intended to resolve speculation regarding specific provisions of the license.

“Fonterra is confident in its legal position and does not expect this matter to disrupt its timeline for any divestment,” the company noted in a statement.

The court action coincides with Fonterra’s ongoing divestment strategy, which focuses on streamlining operations and prioritizing its core business segments.

CEO Miles Hurrell reaffirmed the company’s plan to divest its Oceania and Sri Lanka businesses, citing a strategic shift toward ingredients and foodservice operations.

“Since our announcement in May 2024, we have been working with advisors to assess potential divestment options and determine the best pathway to maximize value for our co-op,” Hurrell said.

Hurrell emphasized that Fonterra’s divestment aligns with its long-term strategy, which seeks to optimize value for shareholders by narrowing the cooperative’s operational focus.

He added that the businesses earmarked for sale have attracted significant interest from potential buyers, a reflection of their strong market position and growth potential.

“Fonterra’s decision to pursue a divestment strategy is driven by our goal of achieving long-term value creation while sharpening our focus on higher-margin areas,” Hurrell explained.

The legal proceedings underscore Fonterra’s efforts to ensure clarity and stability in its partnerships as it prepares to transition its Oceania assets.

Analysts noted that resolving licensing uncertainties is critical to maintaining buyer confidence and ensuring the smooth execution of the sale.

Fonterra’s Oceania business, which includes consumer products and associated operations, remains a key player in the region’s dairy industry.

However, the company’s shift toward ingredients and foodservice operations marks a strategic recalibration aimed at driving sustainable growth.