The two companies established AFF at the end of 2001 to market block butter, spreads and aerosol cream products in the UK.
Fonterra Chief Financial Officer Jonathan Mason said the joint venture had been successful but that it no longer gelled with the company’s long term strategy.
Mason said Fonterra is now focused on developing the business outside of Europe in Asia/AME, Australia and New Zealand, and Latin America.
Anchor brand
The company will continue to license the Anchor brand to Arla but Arla now has a license giving it full rights to the Anchor brand for all dairy categories in the UK and for packet butter and aerosol cream in Europe.
Commenting on the business move, Arla Foods UK chief executive, Peter Lauritzen, said: “Anchor is a very strong, successful, brand in the UK and it is a good business in which to invest.” Currently Anchor makes yearly retail sales totaling £86m.
Lauritzen went on to say that buying the remaining stake in AFF is logical step for Arla to help take the brand forward and develop it further in the UK.
Butter supply
As part of the agreement between the two dairies, Arla will continue to be supplied with Fonterra bulk butter for the Anchor brand and its own label products in the UK.
The transaction value of the deal was not disclosed but Mason said the sale of the stake in AFF would have a positive impact on the Fonterra balance sheet.
Purchase of the remaining stake in AFF follows the announcement from Arla earlier this week that it plans to build a one billion litre milk processing plant near London. The Scandinavian dairy company said the facility will be the largest and most technologically advanced of its kind in the world. It said the investment was about building up the UK business for the next generation.