What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
Fonterra managing director Oceania Judith Swales says the announcement is part of Fonterra's transformation of its Australian business.
"This is our strategy in action for Australia where we focus on the areas we can win in a highly competitive market to deliver the best returns," says Swales.
"We are actively growing our nutritionals business through strategic partnerships and agreements which will see the Darnum nutritionals plant move towards full capacity.
"Our Australian business has particular ingredients strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses; and today's announcement with Bellamy's Australia - one of the fastest growing infant formula companies - reaffirms our strength in nutritionals.
"The Darnum plant is a leading nutritionals plant in Fonterra's global network. Leveraging our Fonterra Research and Development Centre in Palmerston North, the largest dairy innovation centre in the southern hemisphere, we will bring innovation to the Darnum plant and the nutritionals market to capture growing demand.
Bellamy's is one of the fastest growing infant formula companies with strong brand recognition and expertise in the organic ingredient supply chain. Bellamy's has experienced continued growth over many years, and financial year 2014-15 has been exceptional, achieving revenue growth of 156% from the year prior.* Formula comprises 88% of Bellamy's sales.*
"The proposed multi-million dollar strategic agreement will help support the growth of Bellamy's Organic in Australia and abroad, and builds on our strong current relationship."
"We are also nearing the finalisation of the Darnum joint venture with Beingmate Baby and Child Food Company Ltd following the recent formal approval by Beingmate's Board and shareholders," says Swales.
Swales says the cooperative had a clear plan to return its Australian business to strong and sustainable profitability.
Fonterra and Bellamy's will work to finalise the proposed arrangements by the end of the year, with the agreement commencing in 2016.
