Fonterra Joint Venture Deal To Strengthen Gulf Outlook

In a move that BMI believes will significantly strengthen Fonterra's Middle East and North Africa (MENA) region outlook, the New Zealand dairy cooperative giant has completed the buyout of an outstanding 51% stake in its Saudi joint venture partner Saudi New Zealand Dairy Products Company from Saudi Dairy and Foodstuff Company (Sadafco) for about SAR120mn (US$32mn). We see the move laying the groundwork for Fonterra to scale up production with the trend to premiumisation remaining an integral long-term growth driver.

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