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Fonterra agrees to sell DFE Pharma stake to CVC for NZ$633M

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Fonterra agrees to sell DFE Pharma stake to CVC for NZ$633M

Fonterra Co-operative Group Ltd. on Sept. 25 said it agreed to sell its 50% stake in DFE Pharma to CVC Capital Partners Strategic Opportunities II, a fund managed by CVC Capital Partners Ltd., for NZ$633 million.

The transaction is composed of a cash payment of NZ$537 million payable on closing of the sale, plus an interest-accruing vendor loan of NZ$96 million with a 15-year term. A potential additional payment of NZ$44 million is also included in the deal based on DFE's performance over two years.

Fonterra expects the proceeds from the sale, along with other asset divestments this year, to give the company more than NZ$1 billion in available liquidity for debt reduction.

"We set ourselves a tough initial target for debt reduction and we are pleased with the progress we are making," Fonterra CEO Miles Hurrell said in a statement.

The deal is subject to regulatory approvals from competition authorities. The New Zealand-based dairy producer did not disclose an estimated closing date.

DFE Pharma is a joint venture between Fonterra and Dutch dairy producer FrieslandCampina Nederland BV.

As of Sept. 24, US$1 was equivalent to NZ$1.58.