Fonterra has paid nearly $30 million to gain almost full control of Chilean milk processor Prolesur.
Photo: rnz
It has purchased a 13 percent stake in the company from a trust call Fundación, bringing its total stake to 99.9 percent.
Prolesur, based in Southern Chile, sells most of its production to Soprole - a Chilean dairy consumer products business which is also nearly 100 percent owned by Fonterra.
Fonterra's chief executive for Africa, Middle East, Europe, North Asia and the Americas, Kelvin Wickham, said the move would allow Fonterra to simplify the interface between Prolesur and Soprole and take steps to better integrate the two businesses.
"Having the two more closely integrated will generate operating efficiencies across the supply chain from milk collection, to processing and administration," Mr Whickham said.
"It also allows us greater flexibility as we focus on realising the best value for the Co-op from our businesses in Chile in line with our new strategy," he said.
Mr Whickham said Prolesur and Soprole were both strong businesses but their recent performance had been impacted by challenging market conditions, with recent social unrest in the country.
"That's impacted supply chains, through to the supermarkets and the ability to collect milk from farms in some cases," he said.
The remaining 0.1 percent of Prolesur's shares are held by minority shareholders, which Fonterra would offer to purchase at the same price per share being paid to the Fundación for its shareholding, Mr Whickham said.
Fonterra said in total there were about 300 farmers supplying milk to Soprole and Prolesur in Chile.