Fonterra gets Chinese antitrust, foreign investment approval for Beingmate deal

Friday 9th January 2015

Fonterra Cooperative Group, the world's biggest dairy exporter, has been granted antitrust and foreign investment approval by the Chinese Ministry of Commerce to take a 20 percent stake in China's Beingmate Baby & Child Food infant formula maker.

The deal, which will see Fonterra invest $615 million into the Chinese company for a 20 percent equity stake, still needs more regulatory approvals before it can proceed to the next stage, and the Auckland-based dairy exporter will update the market as that progresses, it said in a statement. Once those hurdles are crossed, Fonterra will offer 18 yuan a share for Beingmate stock in a partial tender, that will be supported by chairman Wang Zhentai, whose stake will be diluted to 33 percent.

As part of the deal Fonterra will pour its Darnum plant in Victoria, Australia into a joint venture with Beingmate, of which the New Zealand firm will hold 49 percent and the Chinese company 51 percent.

Under the partnership, Fonterra will licence the Anmum brand exclusively to Beingmate in China, where it has access to 80,000 outlets, and receive royalties. Its benefits include its share of dividends paid by Beingmate, which have been 50-60 percent of profits, and sell raw milk to the Darnum plant, which Fonterra will continue to operate.

Units in the Fonterra Shareholders' Fund were unchanged at $6.

BusinessDesk.co.nz

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