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Fonterra gets green light for China JV

MEDIA RELEASE
6 April 2006

Fonterra gets green light for China JV

The Chinese government has given its blessing to a deal which will see Fonterra take a 43 percent stake in Chinese dairy company San Lu.

Regulatory approval for the joint venture was announced today during the visit of Chinese Premier Wen Jiabao, who is in Wellington to meet with Prime Minister Helen Clark and other cabinet members.

Fonterra CEO Andrew Ferrier said he was delighted the deal had been given permission to proceed, and the company could now move to finalise the details around its planned investment.

As well as being a long-standing customer of Fonterra, San Lu has an excellent record of growth, an established sales and distribution network reaching more than 600 cities in China, and some of that country’s most modern milk processing facilities, Mr Ferrier said.

“Developing a closer working relationship with San Lu is the logical next step for Fonterra’s business in China. It complements our existing importing and consumer businesses there by partnering us with a successful local company that has access to local fresh milk supplies.”

Mr Ferrier said China’s recent economic growth and expanding middle class offered huge opportunities for Fonterra.

“Dairy consumption has increased considerably in recent years, but it is still well below the average for the Asian region. New Zealand has been a successful exporter of dairy ingredients to China for decades, but as local production increases to meet the rapidly growing local demand, becoming part of the local industry will give Fonterra further opportunities to employ our expertise in all areas of the business from milk collection to consumer goods.”

Mr Ferrier said a free-trade deal between New Zealand and China would bring further benefits to the dairy industries in both countries, and Fonterra strongly supported the government’s efforts to bring this about.

ENDS

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