New Zealand's Fonterra buys 18.8% stake in China's Beingmate for $553 mn

New Zealand's dairy giant Fonterra Co-operative Group Limited today said that it had bought an 18.8-per cent stake in China's Beingmate Baby and Child Food Co. Ltd, for $553 million, as part of its plan of increasing its footprint in China.

Fonterra, the world's largest dairy exporter, bought 192 million shares in the Chinese infant formula manufacturer for 18 yuan per share for a total of 3.464 million yuan.

''Our goal was to acquire up to 20-per cent.  We are extremely satisfied and confident that the partnership can and should proceed on the basis of the 18.8-per cent stake, said Fonterra's CFO Lukas Paravicin.

''Over the next few weeks, Fonterra and Beingmate will now move ahead with the next phase of our partnership, which includes establishing a joint venture to buy the Darnum plant in Australia and finalising a distribution agreement making Beingmate Fonterra's exclusive Anmum distributor in mainland China,'' Paravicini added.

Last August, Fonterra and Beingmate announced that they intended to form a global partnership to help meet China's growing demand for infant formula.

Both companies intend to create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe.

The partnership will increase the volume of Fonterra's ingredients and branded products exported to China.

With one of the fastest growing dairy appetites in the world, demand for dairy nutrition in China is expected to double in the next 10 years, according to analysts. The infant formula market in China is currently worth about $18 billion and is expected to grow by 7 per cent to $33 billion by 2017.