Fonterra Co-operative Group (NZE:FCG) said it will divest its global consumer business, excluding greater China, and consumer brands, the integrated Foodservice and Ingredients businesses in Oceania and Sri Lanka, as well as the Middle East and Africa Foodservice business, to Lactalis for NZ$3.85 billion, according to a Friday New Zealand bourse filing.

The sale is subject to certain customary financial adjustments and conditions, including approval by farmer shareholders, separating the businesses being sold from Fonterra, and receipt of certain final regulatory approvals. It is targeting a tax-free capital return of NZ$2 per share, after the completion of the sale.

A farmer shareholder vote is expected to occur in late October or early November.

As part of the sale agreement, Fonterra will continue to supply raw milk, dairy ingredients, and products to the divested businesses under long-term supply agreements.

There is also potential for a further increase from the inclusion of the Bega licenses held by Fonterra's Australian business, which could take the headline enterprise value of the transaction up to NZ$4.22 billion. This will be finalized once a dispute with Bega Cheese (ASX:BGA) is resolved.

Fonterra's shares soared 16% in early trading on Friday, reaching their highest point in over seven years.