Fonterra to buy out Saudi partner for $45M

Wednesday 16th December 2009

Fonterra Cooperative Group, the world’s biggest exporter of dairy products, said it has reached agreement to purchase the remaining 51% of its Saudi Arabian joint venture from its partner for $45 million.

The purchase of the rest of the Saudi New Zealand Milk Products joint venture with Saudi Dairy & Foodstuff, known as Sadafco, still requires regulatory approval in Saudi Arabia, the cooperative said in a statement today. It first flagged the acquisition last week.

The JV, which was established in 1996 and is managed by Fonterra, packs and processes more than 30,000 metric tonnes of New Zealand milk a year. It packs Anchor and Anlene milk powders, produces processed cheese and recombined feta-style white cheese for Fonterra’s sales in the region, it said.

“We are building a sizeable business in 20 countries in this region which combined, account for 250 million people and a dairy market value of more than US$5 billion,” said Mark Wilson, regional managing director for Fonterra Asia/Africa and Middle East. “It is critical that we have long-term access to manufacturing capacity near these markets, to support our growth.”

Saudi Arabia is a signatory to the Arab Free Trade Agreement, meaning products packed in the kingdom can be exported to the member countries free of duties.

Saudi Arabia and the United Arab Emirates are Fonterra’s fastest growing markets in the Middle East, accounting for 60% of its business in the Gulf region, according to its website.

Businesswire.co.nz

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