Fonterra continues to struggle with Chinese investments

The New Zealand cooperative dairy giant Fonterra has not been able to completely sell its stake in the Chinese Beingmate in 1 go. That is why part of the 18% is now offered for sale via the stock exchange.

“We have spoken to a number of interested people about the possible sale of our entire stake in Beingmate, but so far we have not been able to find a buyer,” said Miles Hurrell, Fonterra's director, of the business. "As a result, we are now considering selling part of our business on the stock exchange and must, as required by local listing rules, announce our intent in advance."

Depending on the demand for the shares, under the market rules of China's Shenzhen Stock Exchange, it is only possible to sell up to 90% directly on the exchange every 1 days, or up to 2% in a single block every 90 days. Transactions of more than 5% can be made to an individual party in a so-called 'off-market transaction'.

Hundreds of million loss
“China will always remain one of our most important markets. We are doing good business here and are still very focused on the regions in China where we can succeed,” said Hurrell. Fonterra bought its stake in Beingmate in 2015 for €440 million. This in the hope of capitalizing on the lucrative baby food market. Beingmate then booked huge losses, after which the value of the shares fell to €134 million (-67%).

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.