April 2, 2015
On March 25 the proposed joint venture between FrieslandCampina and Huishan Dairy was granted approval by the Chinese Ministry of Commerce, and on April 1 the two companies officially established Friesland Huishan Dairy – their 50/50 joint venture that will own and operate Huishan Dairy’s Xuishui production plant near Shenyang.
Under the terms of the deal, FrieslandCampina, which is owned by dairy farmers in the Netherlands, Germany, and Belgium paid US$112 million to Huishan Dairy for its 50% stake in the company, and agreed to purchase an additional minimum US$30 million worth of shares in Huishan Dairy on the Hong Kong exchange within six months according to a Hong Kong Stock Exchange notice. The shares that are purchased are subject to a six year lock-up period. Friesland also has the option to increase its stake in the joint venture to 60% in 2019 if yearly production and sales exceed 6,800 tons, and earnings surpass a pre-agreed upon earnings before tax threshold – and could increase its stake again in 2021 if production and sales hit 14,500 tons.
The new venture will process raw milk supplied by Huishan Dairy into infant formula to be marketed in the near future under one of four FrieslandCampina brands – Dutch Lady (Vietnam), Foremost (Thailand), Frisian Flag (Indonesia), or Peak (Nigeria).
Both FrieslandCampina and Huishan Dairy will continue to operate their own separate dairy businesses in China, with Friesland continuing to market its Friso brand, and Huishan continuing to sell its Gold Queen, Gold Label, and Red Label lines of products.
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