Westland Milk Products has signed an agreement to sell the co-operative to China’s Yili for NZD 588 million ($403 million).
The proposed deal will see the New Zealand dairy company be bought by Hongkong Jingang Trade Holding, a wholly owned subsidiary of Yili.
Westland Milk Products said it had carried out a process to explore ownership options following the company’s inability to deliver competitive milk pay-out in recent years.
The board engaged with more than 25 parties to seek indications of interest in a cornerstone investment in Westland or a full acquisition or merger.
Westland Milk Products chairman Pete Morrison said: “The board believes that the proposed transaction represents the best available outcome for our shareholders, and has the unanimous support of the board.
“The acquisition price represents an attractive price to the Westland shares’ nominal value. Westland will seek shareholder approval for the proposed transaction at a special shareholder meeting, which is expected to be held in early July 2019.”
“Under the proposed transaction, our shareholder farmers who are existing suppliers upon the implementation of the scheme will receive the benefit of Westland’s (under the new ownership) commitment (which is guaranteed by Jingang) to collect milk and pay a competitive payout of a minimum of the Fonterra farm gate milk price for ten seasons from the season commencing 1 August 2019.”
Yili has been in New Zealand since 2013 when it acquired Oceania, the South Canterbury-based dairy company. During that time it has invested approximately NZD 650 million ($445 million) in establishing milk powder, infant formula and UHT production lines for Oceania.
Last November, Westland revealed plans to build a NZD 22 million ($15.1 million) plant at its facility in Hokitika, South Island, allowing it to process multiple types of milk into high-value products.
In 2018, New Zealand dairy company Southern Pastures formed a joint venture in the country with Westland Milk Products.