• Fonterra CEO Miles Hurrell
    Fonterra CEO Miles Hurrell

Fonterra will sell a portion of its stake in Beingmate Baby & Child Food Company as part of its efforts to turn the business around.  

CEO Miles Hurrell said while China was one of Fonterra’s most important markets and had a strong business there, the company’s relationship with Beingmate had been “disappointing”. Its current shareholding is 18.8 per cent.

“We are still very much focused on the areas in China where we can succeed,” he said. 

Fonterra’s remaining shareholding will be viewed as “a financial investment only”. “From here, it’s about making pragmatic decisions to get the best outcome for the Co-op from our holding in Beingmate.”

Hurrell said part of Fonterra’s three-point plan to revive the company meant re-evaluating every investment, major asset and partnership to ensure they still meet the co-operative’s needs today,” Hurrell said. 

The starting point was a strategic review of the Beingmate shareholding. “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. 

“We have talked to a number of parties regarding the potential sale of our entire stake in Beingmate, but so far have 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.” 

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

Beingmate is a listed Chinese dairy giant that lost more than two thirds of its market value in recent years. Fonterra originally paid 18 yuan per share for a total outlay of NZ$755 million, but after Beingmate had a series of heavy losses, that has been written down the carrying value to NZ$204 million.  

In December 2018, Beingmate said it was seeking support from the Chinese Government, through an investment firm called Great Wall Guorong Investment. 

It has been restructured, sold assets and reappointed its founder Xie Hong as chairman and returned to profit in 2018. Last month it issued a profit warning, saying its half-yearly result was likely to show a loss of roughly AU$23-32 million.

Beingmate shares last traded on the Shenzhen Stock Exchange at 4.94 yuan.



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