Chinese conglomerate Shanghai Pengxin is poised to buy its second set of dairy farms in New Zealand, the world's leading dairy produce export country, as China's firms increasingly look overseas for sources of milk to meet growing demand at home.
In a statement, the founders of Synlait Farms Ltd, who control 50.2 percent of the company, said on Friday they are committed to accept an offer from SFL Holdings that values the business at NZ$85.7 million ($72.9 million). SFL Holdings is majority-owned by a subsidiary of Shanghai Pengxin.
The founders of Synlait Farms, located in New Zealand's South Island, also have a minority stake in SFL Holdings.
The Shanghai Pengxin moves highlights the growing appeal of dairy companies in Australia and New Zealand as Asia's demand for milk grows, with a takeover battle now raging for Australia's Warrnambool Cheese and Butter Factory Company Holdings Ltd.
The Synlait deal will allow Shanghai Pengxin to beef up its portfolio in New Zealand after it purchased a cluster of farms in the country's North Island for around NZ$200 million in 2012.
Synlait Farms, which owns a total of 4,000 hectares of farmland in the Canterbury region and around 13,000 dairy cows, supplies Synlait Milk, a maker of wholesale milk powder products including infant milk formula for export to China and other countries.
Chinese dairy company Bright Dairy & Food Co holds roughly a 39 percent stake in Synlait Milk, which makes the Pure Canterbury brand of milk formula that Bright sells in China.
Meanwhile Chinese dairy companies Inner Mongolia Yili Industrial Group and China Mengniu Dairy Co's Yashili are each building infant formula processing plants in the country, which exports more than 90 percent of its milk production, to meet growing demand for the high-margin product at home.
($1 = 1.1757 New Zealand dollars)