Fonterra has entered into a conditional agreement to acquire the milk processing assets of the New Zealand Dairies Ltd (NZDL) group in South Canterbury, following the Russian-owned dairy factory going into receivership.
The acquisition, subject to Commerce Commission clearance, would result in NZDL's existing farmer suppliers being paid in full by the receivers and being able to have their milk processed and paid for from the start of the new dairy season which commences in a few weeks.
Fonterra CEO Theo Spierings said the acquisition ensures that the Studholme plant continues to operate and its farm suppliers have certainty that they will be able to sell their milk on a commercial basis from the start of next season.
"The Studholme plant is processing around 150 million litres of milk a year into milk powders for export," said Spierings. "It will complement our new Darfield plant which is due to start taking milk in August.
"Our Strategy Refresh has clearly identified the importance of growing milk volumes and optimising our New Zealand manufacturing operations. This transaction helps deliver on that priority."
As part of the agreement, NZDL's existing suppliers have been offered the opportunity to supply Fonterra on contracts, which will enable them to become Fonterra fully share backed after the 2012/2013 season and require them to be shareholders within six years.
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