FrieslandCampina, Huishan Dairy establish Chinese infant formula JV


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FrieslandCampina, Huishan Dairy establish Chinese infant formula JV

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Friesland Huishan Dairy - FrieslandCampina's newly established Chinese infant formula joint venture - will introduce a new brand in China "in the near future."

FrieslandCampina and Huishan Dairy yesterday (April 1) officially established Friesland Huishan Dairy, a 50/50 joint venture that will own and operate Huishan Dairy’s Xuishui plant near Shenyang.

Days earlier, on March 25, the joint venture – proposed by Dutch dairy FrieslandCampina and Huishan Dairy on October 8 2014 – was granted Chinese Ministry of Commerce (MOFCOM) approval.

FrieslandCampina, owned by dairy farmers in the Netherlands, Germany and Belgium, has paid RMB 692m (US$112m, €103m) to Huishan for its 50% stake, the Chinese dairy said in a Hong Kong Stock Exchange notice.

Netherlands-based FrieslandCampina has also agreed to purchase at least US$30m (€27.7m) worth of shares in Huishan Dairy on the Hong Kong Stock Exchange within six months.

These shares will be subject to a six-year lock-up period.

"An important step"

At Xuishui, Friesland Huishan Dairy will convert raw milk supplied by Huishan Dairy into infant formula, which will be launched in China "in the near future"​ under one of four FrieslandCampina brands - Dutch Lady (Vietnam), Foremost (Thailand), Frisian Flag (Indonesia), or Peak (Nigeria).

In a March 25 Hong Kong Stock Exchange notice announcing MOFCOM approval of the joint venture, Huishan Dairy called the partnership "an important step for the Group to further develop and enhance its business in China."

The joint venture was proposed by FrieslandCampina and Huishan on October 8 2014.

Huishan Dairy and FrieslandCampina will continue to operate their own infant formula businesses in China separately - the Dutch dairy marketing Netherlands-made Friso, and Huishan its Gold Queen, Gold Label, and Red Label ranges.

Under the terms of the joint venture, FrieslandCampina has the option to increase its shareholding in 2019 by a fifth to 60% if annual production and sales exceed 6,800 tonnes and meet a pre-agreed earnings before tax target.

Its shareholding could increase further in 2021 if other earnings before tax targets are met and production and sales of infant formula hit 14,500 tonnes. 

Related topics Business Dairy China East Asia

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