March 31, 2011
 

Ausnutria buys majority stakes in Dutch milk processor 

 

 

The wave of acquisitions by Chinese dairy groups has arrived at Europe, with Hong Kong-listed Ausnutria Diary Corporation recently acquiring one of the oldest Dutch milk processors.

 

Ausnutria, a Chinese baby foods company, agreed to pay EUR10.4 million (US$14.7 million) for a majority shareholding in Hyproca Dairy Group which was founded 114 years ago and currently based in the north of the Netherlands.

 

The deal is the latest in a series of takeovers by Chinese dairy groups since 2008's discovery of milk contaminated with the toxic chemical melamine, a scandal which has led Beijing to encourage the industry to consolidate into larger enterprises so that it will be easier to regulate.

 

However, up till now, tie-ups have been focused largely within the domestic market, where New Hope Dairy completed a full takeover of Anhui Purity Dairy last month, taking its acquisitions to 12.

 

Most of the assets of Sanlu Group, the company at the centre of the melamine scandal, were bought by Hebei Sanyuan.

 

Foreign acquisitions have been centred on the southern hemisphere, where China's Bright Food last year bought milk processor Synlait in New Zealand, which blocked a high-profile attempt by Hong Kong-based Natural Dairy to buy the Crafar group of dairy farms.

 

Ausnutria, which has itself hitherto sourced much of its milk powder in Australia, said that the Hyproca deal would promote a strategy of investing in or acquiring milk production operations.

 

This strategy encompasses investment in overseas cattle farms and/or milk powder producers in order to broaden the group's milk powder supply sources to diversify the group's risk in this aspect.

 

Foreign milk has gained cachet in China since the melamine scandal cast a cloud over domestic supplies.

 

Ausnutria will gain a 51% shareholding in Hyproca Dairy through buying 284,000 shares in the business direct and 175,000 shares in parent company Hyproca Holding.

 

The holding company also owns baby milk group Lypack group and bought a stake in goats' milk company HB Food three years ago.

 

Ausnutria's purchase comes despite a 37% slide to HKD130.9 million (US$16.8 million) in earnings last year due to higher operational costs and distributional hiccups.