Milk factory sale decision delayed

Fonterra will have to wait until next month for a decision as to whether or not it can proceed with the takeover of the troubled New Zealand Dairies (NZD) milk processing plant at Studholme, south of Timaru.

The dairy giant wants to buy the factory from the receivers of the Russian-owned company, which went into receivership in May.

The Commerce Commission has to approve the deal and was to make a decision by now, but has delayed its finding until September 14.

In its application to the commission Fonterra said the acquisition was the best option for the New Zealand dairy industry, and for NZD's creditors, suppliers and employees. The Studholme plant offered an opportunity for expanding Fonterra's nutrition strategy as part of plans to grow its share of the of the international paediatric nutrition market.''

At the time the Studholme factory went into receivership it owed dairy farmers about $30 million. Should the commission give clearance for the buyout, NZDs existing suppliers would be paid in full by Fonterra.

Fonterra has said in its application that: ''It would continue to be constrained by established and expanding competitors, a real threat of new entry, large and sophisticated suppliers and by the Dairy Industry Restructuring Act''.

The commission said it had sought, and had been granted (by the applicant), an extension to allow more time to complete its analysis of the effect of the buyout and expected to make a decision on September 14.

The Studholme factory employs 60 people and processes about 150 million litres of milk a year.

The Timaru Herald