NEW ZEALAND – New Zealand’s dairy giant, Fonterra has agreed to sell its Tip Top ice cream business to global ice cream manufacturer Froneri for US$250 million (NZD 380 million).

The transaction is expected to complete in May and Tip Top will continue with operations at its Auckland-based factory at Mount Wellington.

Founded in Wellington in 1936, Tip Top sells a range of ice cream bars, tubs and ice lollies under the Tip Top and Kapiti brands, which both use fresh milk and cream, from New Zealand grass-fed cows.

Fonterra has said that it has signed an agreement with the new owners to supply milk which ensures that Fonterra farmers will continue to be part of the Tip Top business.

As part of the transaction, Fonterra will retain full global ownership of the Kāpiti brand and will be licencing its use for ice cream to Froneri.

“Since we took ownership of Tip Top in 2001, a lot of work has gone into ensuring it remained New Zealand’s leading ice cream company,” said Fonterra CEO Miles Hurrell.

“Over that time, we’ve had strong support from New Zealanders, and I want to recognise and thank them for that.

“Tip Top has always listened to consumers and cared about their changing tastes, as well as their long-time favourites.

“An average of 340 serves of Tip Top are enjoyed every minute of every day. This came through in both the number and quality of bids we received.

“It’s a fantastic brand and as a result, we’ve secured a good price for our farmers and unit holders.”

Froneri, which is the third largest ice cream manufacturer in the world, brings in leadership and global expertise in ice cream, reach into new ice cream markets, and new consumer products.

When the deal closes, Tip Top employees will transfer across to become part of Froneri.

“We have always admired Tip Top as New Zealand’s favourite and most trusted ice cream brand,” said Froneri CEO Ibrahim Najafi.

“The acquisition enhances our scale and supports our vision to build the world’s best ice cream company.”

In December, Fonterra said it was sale of Tip Top business to reduce its debt levels.

For the year ended July 2018, Fonterra reported a net loss of NZD 196 million (US$128.5 million), its first annual loss since its inception in 200.

This saw the dairy firm embark on strategic business review, including an agreement with Chinese infant formula firm Beingmate to unwind their joint venture in Darnum, Australia.

In the six months ended January 31, Fonterra returned to profitability after reporting a 2% rise in sales volume.

The company announced a portfolio review, with plans to sell its 50% stake in DFE Pharma, a joint venture it established in 2006 with FrieslandCampina.