Fonterra to invest $11.7m in Lithuanian dairy company
Fonterra has announced it is to spend $11.7 million for a 10 per cent equity stake in Lithuanian dairy company Rokiskio Suris, the largest in the Baltic State country.
A Fonterra spokeswoman said the investment would enable the dairy giant to secure high-value whey protein ingredients for Eastern and Western European, Middle Eastern and North African markets.
The deal is subject to a due diligence review, final legal agreements and closing conditions.
Although the Rokiskio company was founded in 1964, its beginnings go back to 1925 when it was established to manufacture butter. It became a state-owned company in 1964 when it branched out into making cheese, curds and sour cream.
With the collapse of the Soviet Union it became a private company in 1991, with its initial shareholders employees, but since then foreign investors have added to its capital.
Rokiskio is the largest dairy processor in Lithuania and has been supplying Fonterra with whey protein products for several years. It produces more than 30,000 tonnes of fermented cheese each year.
Its main export is cheese, but it also produces lactose, whey protein concentrate, milk powder, butter, curd cheese and fresh dairy products for the local market.
"This potential investment reflects Fonterra's move to form strong partnerships to develop a sustainable European-sourcing network, providing a reliable and efficient chain of supply and complementing its New Zealand-sourced ingredients," the spokeswoman said in a statement.
The final investment value will be confirmed if the provisional agreement goes ahead, which is expected to be in October.