Fonterra strikes $163 million deal on China joint venture farms

Fonterra chief executive Miles Hurrell. Photo / NZME

Fonterra has agreed to the sale of its two joint venture farms in China's Shandong province to Singapore-based AustAsia Investment Holdings for US$115.5 million ($163.4m).

Fonterra, which owns the farms with a joint venture partner, has a 51 per cent stake in the business and will receive NZ$88m in total asset sale proceeds, which includes cash on completion.

The sale of the JV farms is unconditional and requires no further regulatory approvals.

AustAsia, a raw milk producer, is majority-owned by Singapore-listed Japfa, a low-cost producer of protein staples.

Fonterra chief executive Miles Hurrell said the sale was another important milestone for the co-operative and aligns to its strategy of prioritising New Zealand milk.

"The sale of the JV farms allows us to focus even more on our farmer owners' milk and follows the sale of our two wholly owned China farming hubs earlier this year," he said in a statement.

"Greater China continues to be one of our most important strategic markets. We remain committed to our China business, bringing the goodness of New Zealand milk to Chinese customers in innovative ways and partnering with local Chinese companies to do so."

Hurrell said Fonterra was well-placed to continue to grow its business in Greater China.

In April, Fonterra sold its two wholly-owned China farming hubs in Shanxi and Hebei provinces to Inner Mongolia Youran Dairy for $552m.