July 4, 2011

Fonterra acquires full ownership of RD1

Press Release

Fonterrahas acquired 100% ownership of rural supplies chain RD1, re-acquiring the business after selling a 50% stake in it in 2006.

Fonterra sold a 50% stake in RD1 in 2006 to Australian rural supplies chain Landmark, owned by AWB. As part of that agreement, Fonterra had a pre-emptive right to buy back RD1 if Landmark or AWB were sold.

The opportunity arose in December 2010, when Canadian company Agrium bought AWB.

Due to rules in the original shareholders' agreement with Landmark, the purchase price cannot be disclosed.

Fonterra Chief Executive Officer Andrew Ferriersays Fonterra was excited at the prospect of RD1 rejoining the fold.

"Since 2006, RD1 revenues have increased from US$394 million to US$741 million, producing great returns for both Fonterra and Landmark," Mr Ferrier says. "RD1 is a solidly performing company with strong farming roots and it's great to have it back in the family."

Over the next three months Ferrier says Fonterra will review the business and analyse the opportunities before announcing initiatives to better leverage RD1 for shareholders.

"The time of this acquisition could not be better with both Fonterra and RD1 about to conclude extremely good financial years," Ferrier said. "Further, we see many future advantages for Fonterra's farmer shareholders using a dairy focused store they own and where all the profits come back to them."

RD1 was formed in 2002 with the consolidation of the trading store networks of both the New Zealand Dairy Group and Kiwi Co-operative Dairies Limited.