15/06/12

New Zealand dairy co-operative Fonterra has agreed to acquire the assets of Russian company New Zealand Dairies (NZDL) for an undisclosed amount.

Under the agreement, Fonterra will acquire NZDL's dairy factory in Studholme, South Canterbury, which has the capacity to process around 150 million litres of milk a year into milk powders for export.

In addition, NZDL's existing suppliers have been offered the opportunity to supply Fonterra on contracts, which will enable them to receive Fonterra shares after the 2012/2013 season and become shareholders within six years.

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 beginning of next season.

"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," Spierings added.

The acquisition, which is subject to Commerce Commission clearance, is expected to complement Fonterra's new plant in Darfield which is due to start operations in August.

NZDL's dairy factory was placed into receivership on 17 May 2012. The receivers, Colin Gower, Stephen Tubbs and Brian Mayo-Smith of BDO Chartered Accountants, called for bids to buy the business and assets of NZDL soon after.