Fonterra in baby formula deal

FOOD

New Zealand's Fonterra said that it will take a stake in Chinese baby food and formula maker Beingmate Baby and Child Food in the dairy giant's first tie-up with a Chinese processor since its involvement in a tainted infant formula scandal in 2008.

The tie-up continues a trend of foreign dairy producers partnering with established Chinese players to grab greater shares in China's fast-growing dairy market. French dairy giant Danone in February paid $665m (€504m) to lift its stake in China Mengniu Dairy.

Fonterra Cooperative Group Ltd, the world's largest dairy exporter, said it would take a stake of up to 20pc in Beingmate, China's biggest maker of infant milk formula, at 18 yuan per share. That is a 25pc premium to the stock's last closing price.

Its total investment in the partnership came to about $51m, including proceeds from selling Beingmate a stake in an Australian plant,

The cooperative also said it would invest about $463m to boost dairy processing capacity in New Zealand.