Fonterra plans to reduce Beingmate shareholding

07 Aug 2019 --- Fonterra has announced its intention to sell a portion of its stake in China-based Beingmate Baby & Child Food Company Ltd, which is currently a shareholding of 18.8 percent. Chief Executive of the New Zealand multinational dairy co-operative Miles Hurrell says this decision 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 co-operative’s needs today,” he says in a statement. “This started with a strategic review of our relationship with Beingmate, which has been disappointing.”

“The first action in this review was bringing the distribution of Anmum in China back in-house under our management. We then ended the Darnum joint venture with Beingmate, bought back Beingmate’s share of our Darnum facility in Australia and entered into a multi-year agreement for Beingmate to purchase ingredients from us.

“What remains is our shareholding in Beingmate Baby & Child Food Co., which we now view as a financial investment only.”

Hurrell adds that Fonterra has spoken with a number of parties regarding the potential sale of its entire stake in Beingmate, but so far has been unsuccessful in finding a buyer.

“As a result of this, we are now considering selling part of our holding and, as required by local listing rules, need to pre-announce our intention,” he adds.

Subject to demand for the shares, under the Shenzhen Stock Exchange market rules, it is only possible to sell up to 1 percent every 90 days directly on the exchange, or sell up to 2 percent in a single block every 90 days. Trades greater than 5 percent can be made to an individual party in an off-market transaction.

“From here, it’s about making pragmatic decisions to get the best outcome for the co-op from our holding in Beingmate,” adds Hurrell. “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.”

Edited by Gaynor Selby