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Fonterra and Beingmate unveil China infant formula partnership

By Mark Astley+


Fonterra and Beingmate unveil China infant formula partnership

Fonterra is prepared to pay NZ$615m (US$514m, €390m) for a 20% stake in Chinese baby food manufacturer Beingmate in its latest attempt to expand its presence in China’s lucrative infant formula market.

New Zealand-based Fonterra, the world's largest dairy exporter, announced earlier today it had entered into a global partnership with Hangzhou-based Beingmate with the aim of increasing the availability of its Anmum brand infant formula in China.

It now plans to issue an offer to acquire a stake of up to 20% in Beingmate at a premium price of RMB 18.00 (US$2.93, €2.23) per share.

If approved by Beingmate shareholders and regulatory authorities in Australia and China, the duo will establish a joint venture to purchase Fonterra’s Darnum plant in Australia. The JV-owned plant will prioritize the supply of infant formula and nutritional milk powder to China.

Beingmate will also be appointed the exclusive distributor of Fonterra’s Anmum infant formula in China.

Fonterra hopes the tie-up with Beingmate will strengthen its infant formula brand presence in the dairy-hungry country.

“China is our number one market and the proposal to join forces with Beingmate will be an important building block in Fonterra driving volume and value, and taking a step forward in terms of being a globally relevant cooperative,” said Theo Spierings, CEO, Fonterra.

“Our partnership with Beingmate will show the benefits of an integrated and secure supply chain, starting in New Zealand – our number one milk pool – where we are fast-tracking investment in milk processing capacity to meet global demand.”

Domestic investment

Alongside the unveiling of its partnership with Beingmate, Fonterra today announced plans for a NZ$555m (US$464.5m, €352.5m) investment in its domestic processing capacity.

A portion will be set aside to finance the construction of a milk powder drier, with the capacity to process up top 4.4m litres of milk daily, at its Lichfield site in Waikato.

Three new processing plants will also be installed at the cooperative’s Edendale site in Southland.

Today's announced investment will take the amount ploughed by Fonterra into its New Zealand processing capabilties since 2011 to more than NZ$1.8bn (US$1.5bn, €1.14bn).

“We are investing ahead of the milk growth curve to give us the flexibility to take advantage of relative market prices, including during the peak season," said Robert Spurway, managing director of global operations, Fonterra.

"It will also accommodate growth from existing farmers and new volume from joining farmers.” 

Once completed, the expansions should create 50 full-time positions at Lichfield and 25 at Edendale, Fonterra added.

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