Fonterra receives approval to acquire assets of New Zealand Dairies

New Zealand dairy co-operative Fonterra has announced that the Commerce Commission, the country’s competition enforcement and regulatory agency, has approved its acquisition of the assets of Russian-owned company New Zealand Dairies (NZDL).

In June 2012, Fonterra entered into an agreement to acquire milk processing assets of NZDL, as part of its strategy to boost milk volumes and strengthen its manufacturing operations.

The deal includes NZDL’s dairy factory in Studholme, South Canterbury, which produces milk powders for export.

Fonterra CEO Theo Spierings said the clearance by the Commerce Commission provided certainty for NZDL’s suppliers and would boost the co-operative’s processing capacity.

"This investment in the Studholme plant underpins our commitment to the dairy industry in Canterbury, one of the fastest growing dairy regions in New Zealand," Spierings added.

The Studholme plant, which complements Fonterra’s new facility in Darfield, marks the co-operative’s 27th processing factory and its 11th in the South Island.

Fonterra, which has been operating the Studholme plant over the past few months for the receivers, started collecting milk from NZDL suppliers in early August 2012 and boosted the facility’s operations on 14 August 2012.

The Studholme facility is currently processing more than 800,000l per day of milk into whole milk powder for export.

From 15 September 2012, NZDL suppliers will become Fonterra contract suppliers, with the opportunity to receive Fonterra shares after the 2012/2013 season.

NZDL’s dairy factory was placed into receivership on 17 May 2012, following which the receivers, Colin Gower, Stephen Tubbs and Brian Mayo-Smith of BDO Chartered Accountants, called for bids to acquire the business and assets.