OIO approves Chinese buyer for half-share in Synlait

Monday 27th September 2010 1 Comment

The Overseas Investment Office has given the all-clear to China’s Bright Dairy to buy into Synlait Ltd.’s processing business.

Bright Dairy will buy 51% of Synlait Milk for $82 million, paving the way for the construction of a second milk powder plant to begin operations within 12 months.

The plant will produce value added products, such as infant formula and other high specification formulated milk powders, and is part of Synlait’s ambition of tapping the Chinese market.

“This is a further step in attaining our strategic goal of becoming a leading supplier of specialised milk powder products to the Asian market, and growing into one of the larger milk processing businesses in New Zealand,” chief executive John Penno said.

Synlait operates two entities, with the milk division processing some 70 million litres annually, while its 14 farms produce 100 million litres of milk a year.

The approval comes on the same day Finance Minister Bill English announced changes to the regulation of foreign investment, which will let ministers assess the impact of purchases of large tracts of farmland and vertical integration of agricultural processing on the wider New Zealand economy.

It will also let them take into account mitigating factors around local involvement in an offshore venture.

The Synlait-Bright Dairy joint venture was announced in July, and paves the way for a listing of the milk unit in the next five years after the Chinese partner said it would support such a move.

If Synlait Milk does list, Bright Dairy will be entitled to subscribe to new shares to keep its 51% share.

The Chinese company is a subsidiary of Bright Food Group, which is in exclusive talks with British cookie maker United Biscuits Holdings, according to media reports.

Businesswire.co.nz

Comments from our readers

On 28 September 2010 at 12:53 pm g murphy said:

shame this company was not floated on the share market, some very good people behind it.