FrieslandCampina Synlait investment could ‘shake-up’ NZ dairy, says farmer rep

By Mark ASTLEY contact

- Last updated on GMT

FrieslandCampina Synlait investment could ‘shake-up’ NZ dairy

Related tags: Milk

FrieslandCampina’s acquisition of a 7.5% stake in New Zealand-based infant formula manufacturer Synlait Milk could “shake-up” the country’s dairy industry, Federated Farmers of New Zealand has claimed.

The organisation, which represents the interests of farmers in the country, has branded the Dutch dairy processor’s share purchase a “toe-dipping exercise" - ​adding that “clearly there is an underlying desire to get exposure to New Zealand liquid milk.”

According to Federated Farmers Dairy chairman, Willy Leferink – a Fonterra supplier-shareholder and a contract milk supplier to Synlait – FrieslandCampina “easily has the financial means to acquire more of Synlait later if it so chooses.”

“Its cornerstone shareholding is to us more like a beachhead.”

“While other investors have not meant much to Kiwi dairy farmers, FrieslandCampina most certainly will,” ​Leferink added.

Increase Synlait stake?

Speaking with DairyReporter.com yesterday, FrieslandCampina spokesman, Jan-Willem ter Avest, attempted to ease Kiwi dairy farmer concerns regarding its intentions in New Zealand.

“Like the Netherlands, New Zealand is a country which is important for the global dairy industry and therefore offers opportunities for companies like FrieslandCampina.”

“With this investment, we are supporting our supply of raw materials in the emerging markets and also the growth of Synlait Milk,”​ he said. “It is not uncommon to have local suppliers. Other companies do the same. Sometime it is even required by a customer in order to secure its supply.”

He did not, however, rule out a future increase in the company's shareholding in Synlait Milk.

“At this time it is difficult to say it depends on a lot of factors,” ​said ter Avest.

“A decision to increase or even reduce a stake depends on a variety of factors. So we are unable to comment on this. With this investment, FrieslandCampina acknowledges the growth potential of Synlait Milk Ltd.”

Synlait “growth initiatives”

FrieslandCampina acquired its 7.5% stake in Synlait Milk through an initial public offering (IPO) of shares by the company.

The IPO was launched earlier this month in the hope of raising around NZ$120m (US$93m) to fund a series of “growth initiatives,” ​including the construction of a new lactoferrin extraction and purification plant, an on-site blending and consumer packaging facility, a new spray dryer, and a quality testing laboratory.

Completion of FrieslandCampina’s share acquisition is subject to the listing of Synlait Milk on the New Zealand Stock Exchange (NZX), which is expected to take place on 23 July 2013. 

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