December 2, 2005

Fonterra to buy 43 percent of Chinese dairy giant

New Zealand's dairy giant Fonterra Co-operative Group Ltd. said it would buy 43 percent of China's biggest milk powder producer, San Lu Group, for RMB864 million (about US$107 million).

This purchase was one of the largest investments made by a foreign company in China's dairy industry.

Fonterra said RMB603 million of the purchase price would be used to buy new shares in San Lu, which expects RMB7.5 billion in overall revenues for 2005.

The company's chief financial officer Guy Cowan said San Lu was a household name across China, which would allow better recognition of Fonterra products and expansion into China.

According to the China Dairy Information Centre, the country's per capita milk consumption annually is expected to reach 30 kilogrammes by 2015 from 2.3 kilogrammes now.