Dairy Co-operative group, Fonterra has reportedly entered into an agreement with Chinese baby formula firm Beingmate to unwind their joint venture located in Darnum, Australia. As per sources from the New Zealand-based dairy company, both Fonterra and Beingmate have reached a provisional agreement with regards to the joint venture.
In 2014, Fonterra bought an 18% stake in Beingmate and as part of this investment the two companies acquired the Darnum plant located in Victoria.
Sources claim that during Fonterra’s 2018 annual results presentation, the company signaled undertaking a strategic review of its investments so as to ensure that the company is fit for the purpose. The company has been open regarding the fact that it’s looking at all aspects of its investment in Beingmate being a part of the broader strategic review, which also includes the Darnum-based joint venture, cite sources.
According to sources familiar with the development, Fonterra is projected to unveil further details related to the plans for Darnum in its first-quarter results, which are anticipated to be published soon. In its latest financial results, Fonterra witnessed its first yearly loss since its origin back in 2001. The unsatisfactory figures were generated by a $287.7 million write-down on the investment in Beingmate.
According to a news report by NZ Herald, Beingmate stated it had inked a cooperation agreement with Great Wall Guorong Investment, a Chinese state-owned investment company, adding to speculations that the dairy co-op may be close to exiting its 18.8 percent stake having faced with a $433 million loss already.
For the uninitiated, Great Wall was founded to help reduce the impact of the Asian financial crisis by getting bad loans off China’s largest banks.
Back in July, in an effort to re-focus the business toward growth, Beingmate roped in Bao Xiufei as their new general manager. Meanwhile, Fonterra hired Goldman Sachs to examine its shareholdings in the Chinese infant formula company, reported sources.