New Zealand-based dairy giant Fonterra has confirmed that it has acquired an 18.8 per cent share in leading Chinese infant formula manufacturer, Beingmate Baby & Child Food Company Ltd, for around NZ$553 million. The transaction will be closed in the next few days.

Chief Financial Officer Lukas Paravicini said the companies had earlier made provision for the possibility of the Partial Tender Offer reaching slightly less than 20 per cent.

“Our goal was to acquire up to 20 per cent,” Mr Paravicini said. “We are extremely satisfied and confident that the partnership can and should proceed on the basis of the 18.8 per cent stake.  It is a good result,” he said.

“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,” Mr Paravicini said.

In August 2014, Fonterra and Beingmate announced that they intended to form a global partnership to help meet China’s growing demand for infant formula. The Companies said the partnership will 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. It is intended to increase the volume and value of Fonterra’s ingredients and branded products exported to China.

At the time, Fonterra Chief Executive Theo Spierings said the partnership between two leading dairy nutrition companies would be a “game changer” that would provide a direct line into the infant formula market in China, which is the biggest growth story in paediatric nutrition in the world.

“The infant formula market in China is worth about NZ$18 billion today and is expected to be worth NZ$33 billion by 2017,” Mr Spierings said at the time. “This growth is driven by increasing urbanisation, higher disposable incomes, a preference for premium brands, and relaxation of the one child policy,” he said.

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