NZ's Fonterra to buy stake in China's Beingmate

New Zealand dairy giant Fonterra confirmed Monday that it will buy 18.8 percent of Chinese infant food maker Beingmate, less than the 20-percent stake it had been aiming for.

Fonterra Co-operative Group Ltd said it had completed the partial tender offer for Beingmate Baby & Child Food Company Ltd and the transaction would be closed in the next few days.

"Our goal was to acquire up to 20 percent. We are extremely satisfied and confident that the partnership can and should proceed on the basis of the 18.8 percent stake. It is a good result," Fonterra chief financial officer Lukas Paravicini said in a statement.

The purchase at 18 ($2.87) per share would cost Fonterra 3.46 billion ($551.95 million).

As well as Fonterra buying a stake in Beingmate, the two companies would set up a joint venture to buy Fonterra's Darnum plant in Australia and agree a distribution deal for Fonterra's Anmum brand in the Chinese mainland.

These moves would go ahead over the next few weeks, said Paravicini.

Fonterra and Beingmate announced in August last year that they intended to form a global partnership to help meet China's growing demand for infant formula.

The partnership will create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia and Europe.

Fonterra said at the time it would invest NZ$1.17 billion ($861.81 million) in forming the partnership and building new processing capacity to meet export demand.

Beingmate would own 51 percent of the joint venture in Darnum, which produces infant formula and other nutritional milk powders, and the plant would prioritize supply to the Chinese market.