Fonterra acquires 18% stake in China’s infant food producer Beingmate

New Zealand-based co-operative dairy Fonterra has acquired an 18.8% stake in Chinese infant formula manufacturer Beingmate Baby and Child Food Company for €525m.

Fonterra said with this move, the volume and value of its ingredients and branded products exported to China will rise.

The two companies had previously made an announcement about the acquisition in August 2014, with an aim to form a global partnership to meet China’s increasing demand for infant foods.

A fully integrated global supply chain will be created as a result of the partnership, which will take products from the farm gate direct to China’s consumers using Fonterra’s milk pools and manufacturing sites in New Zealand, Australia and Europe.

Fonterra chief financial officer Lukas Paravicini said: "Our goal was to acquire up to 20%.We are extremely satisfied and confident that the partnership can and should proceed on the basis of the 18.8% stake. It is a good result

"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 purchase the Darnum plant in Australia and finalising a distribution agreement making Beingmate Fonterra’s exclusive Anmum distributor in mainland China."

Fonterra said in a statement that it paid CNY18 per share for 192 million shares in the company.

According to Reuters, the China dairy market is important for Fonterra, as it imports a quarter of New Zealand’s total dairy exports.

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Image: Fonterra and Beingmate want to form a global partnership to meet China’s increasing demand for infant foods. Photo: courtesy of Fonterra.