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Royal FrieslandCampina lifts stake in Synlait Milk to 9.999% buying shares at $3.85 apiece

Royal FrieslandCampina has lifted its stake in Synlait Milk [NZX: SML] to 9.999 percent from 7.5 percent, adding to an investment that has gained 41 percent since its NZX debut last July.

The Netherlands-based cooperative bought about 3.66 million shares at $3.85 each yesterday, according to a statement to the NZX. The shares last traded at $3.87, having sold in Synlait's initial public offering last year at $2.20 apiece.

The purchase puts the Dutch company, where the current Fonterra chief executive Theo Spierings was a senior executive until 2009, ahead of Japan's Mitsui & Co, with an 8.4 percent holding, as the second-biggest shareholder in the Canterbury-based dairy processor. China's Bright Dairy Food owns 39 percent, having been diluted during last year's IPO.

"Our working relationship with FrieslandCampina continues to develop," chairman Graeme Milne said in a statement. "They have become both a valued customer and key strategic partner, alongside our other first tier multinational customers, and we view this announcement as a positive endorsement of the growth and performance of Synlait Milk."

In January, Synlait lifted its forecast milk price for the 2014 season to a range of $8.30 to $8.40 per kilogram of milk solids from $8. It also said net profit would be between $30 million and $35 million in the year ending July 31, up from the $19.67 million forecast in the company's prospectus.

Chairman Milne said at the time that the company is benefiting from growth from its value-add products and a favourable product mix. Dairy products have helped drive New Zealand's terms of trade to a 40-year high and made China the nation's biggest export market.


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Comments and questions

The boat that Fonterra missed!!

Its called vertical integration. What was ven Heyden and his cohorts thinking?

Perhaps VH and his cohorts were so focused on 'discovering value' in the share price with their capital restructure the eye was well off the ball with respect to long term value in the business. Just the message the farmer owners were trying to get across for some time, but arrogance and group think in Fonterra's leadership prevailed. It was inevitable there would be distraction from core purpose of the co-operative when you expose your co-op to influence from the short term mentality of derivatives traders. Its hard to make good calls for the long term when sharemarkets demand immediate reward , continuous disclosure and 6 monthly reporting, but even harder when leadership appears focused on their exit price instead of growth. Between them 3 Fonterra directors sold some 50 Million dollars worth of shares in the year after the capital restructure.
Freisland Campina is a co-operative that leads the way in delivering long term value to their farmer owners but also in engaging with them.