Australia, N.Z. dairy groups join forces

By Jane Searle

SYDNEY, Australia (CNN) -- Two of the biggest food companies in Australia and New Zealand will join forces to create an Australasian dairy products giant.

Australia's Bonlac Foods Ltd and New Zealand's Fonterra Co-operative Group said Monday they would merge their consumer products division.

The merged company, to be known as Australasian Food Holdings (Australia) Pty Ltd (AFHL) brings together the Bonland Dairies and Peter & Brownes businesses in Australia, and the Tip Top and Mainland Products businesses in New Zealand.

Fonterra will be the major shareholder in the merger, with Bonlac holding an 11.4 percent share.

The Fonterra Co-operative is New Zealand's largest company and owns a 25 percent stake in Bonlac.

Aorangi Laboratories Ltd and Calpa Pty Ltd will be other minority shareholders.

Platform for future growth

Australasian Food Holdings is expected to have annual sales of over $1.11 billion. The company will market names such as Mainland, Bega, Bodalla, Tip Top Ice Cream, Western Star and other brands in the Australia Pacific region.

Bonlac chairman Noel Campbell said the deal would solidify the value of Bonlac's investment in the consumer products business.

"We have also negotiated an option with Fonterra, which gives Bonlac the ability to sell its shares in AFHL, and capitalize on the value of the investment, if it so desires in the future," said Campbell.

Fonterra CEO Craig Norgate told the New Zealand Herald the merger created a solid platform for growth in Australasia.

"This is a very significant move that contributes to our objective to create the greatest value for Fonterra shareholders", Norgate said in a statement.