Fonterra is to sell its stake in Chinese infant formula company, Beingmate. The move comes as the co-op failed to find a buyer for its entire shareholding and is now going to sell down a portion of its stake. Fonterra paid NZ$750m (€429m) for its 18.8% stake in 2015, in a bid to gain access to Chinese consumers for its infant formula. Last year, Fonterra wrote down the investment in Beingmate by NZ$405m (€232m). As a result, the dairy giant made its first ever annual loss of NZ$196m (€112m).
Fonterra is to sell its stake in Chinese infant formula company, Beingmate. The move comes as the co-op failed to find a buyer for its entire shareholding and is now going to sell down a portion of its stake.
Fonterra paid NZ$750m (€429m) for its 18.8% stake in 2015, in a bid to gain access to Chinese consumers for its infant formula. Last year, Fonterra wrote down the investment in Beingmate by NZ$405m (€232m). As a result, the dairy giant made its first ever annual loss of NZ$196m (€112m).
The investment in Beingmate, which aimed to capitalise on China’s growing demand for infant formula and provide Fonterra with a presence in China’s branded-dairy industry, has not performed as expected. Shares in Beingmate have almost halved in value since April.
China will always be one of our most important markets
Subject to demand for the shares, under the Chinese Stock Exchange rules it is possible to sell only up to 1% every 90 days directly on the exchange, or sell up to 2% in a single block every 90 days. Trades greater than 5% can be made to an individual party in an off-market transaction.
The decision is part of Fonterra’s three-point plan to turn around the business. Despite this move, Fonterra chief executive Miles Hurrell has reiterated the importance of the Chinese market saying “China will always be one of our most important markets. We’ve got a strong business there and are still very much focused on the areas in China where we can succeed.”
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