Wednesday, 07 August 2019 11:04

Fonterra to offload Beingmate shares 

Written by  Sudesh Kissun
In 2015, Fonterra invested $750 million in the infant formula firm, Beingmate. In 2015, Fonterra invested $750 million in the infant formula firm, Beingmate.

Fonterra’s disastrous investment in Chinese baby food company, Beingmate could soon come to an end.

The co-op is selling its stake in portions after failing to buy a buyer for the entire shareholding.

Subject to demand for the shares, under the Shenzhen Stock Exchange market rules it is only possible to sell 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.

Fonterra chief executive Miles Hurrell says from here, “it’s about making pragmatic decisions to get the best outcome for the co-op from our holding in Beingmate.”

In 2015 the dairy giant invested $750 million in the infant formula firm, however, the investment failed to live up to expectations.In 2017 it wrote off the investment to the tune of $439m. Fonterra paid $3.92/share: based on current trading, the shares are worth only $1.08 each.

Fonterra also wound back its partnership with Beingmate: bringing distribution of its popular Anmum baby formula back in-house and ending the Australian joint venture involving its Darnum plant.

Fonterra still has a multi-year agreement with Beingmate to sell ingredients.

Hurrell says the decision to sell Beingmate shares is part of Fonterra’s three-point plan to turn around the business. 

“One aspect of this plan was to take stock of our business. As part of this, we have re-evaluated every investment, major asset and partnership to ensure they still meet the cooperative’s needs today.

“This started with a strategic review of our relationship with Beingmate, which has been disappointing.”

Hurrell reiterated Fonterra’s commitment to the Chinese market.

“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.”

More like this

Farmers' call

OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.

Wasted energy

OPINION: Finance Minister Nicola Willis could have saved her staff and MBIE time and effort over ‘buttergate’ recently by not playing politics with butter prices in the first place.

Featured

Dr Mike Joy says sorry, escapes censure

Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.

People-first philosophy pays off

The team meeting at the Culverden Hotel was relaxed and open, despite being in the middle of calving when stress levels are at peak levels, especially in bitterly cold and wet conditions like today.

Farmer anger over Joy's social media post

A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.

From Nelson to Dairy Research: Amy Toughey’s Journey

Driven by a lifelong passion for animals, Amy Toughey's journey from juggling three jobs with full-time study to working on cutting-edge dairy research trials shows what happens when hard work meets opportunity - and she's only just getting started.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Buttery prize

OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having…

Gene Bill rumours

OPINION: The Gene Technology Bill has divided the farming community with strong arguments on both the pros and cons of…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter