Russia's largest baby formula manufacturer intends to take a controlling share in South Canterbury-based New Zealand Dairies Ltd after yesterday receiving Overseas Investment Office approval to do so.
Nutritek Overseas, which already has a 5.65% stake of New Zealand Dairies (NZDL), yesterday said it would take a controlling share of up to 35% in the company, which operates a milk drying plant at Studholme and has just completed its first season of production.
Nutritek had indicated it sought a 35% stake.
Finance Minister Michael Cullen and Land Information Minister David Parker yesterday granted permission for Nutritek to buy 100% of the company within 12 months.
NZDL chairman Peter Lavery yesterday welcomed the ministers' decision, saying it allowed the company to look forward with confidence "and remove the distraction and irritation of past issues around shareholding."
Mr Lavery said senior Nutritek management visited the site in February and indicated plans to invest further in the plant, which operates one drier, and had plans for a second.
The issue of foreign ownership had divided the company, with the New Zealand-based founders keen to keep it locally owned, but a shortage of cash meant they had to look for capital from new shareholders.
They found a fair chunk of that from Nutritek, which underwrote $24 million towards the $140 million cost of the plant.
Mr Lavery said at the time that Nutritek also provided a distribution network and technological expertise in producing infant formula and specialised baby and infant nutrition.
Now, 24.9% of the company is foreign-owned.
Earlier this year, an agreement was reached with suppliers who were offered a three-year contract, a deal which was part of ongoing negotiations designed to meet their concerns.
In 2004, Nutritek reported a net profit of $US13.9 million from revenue of $US170 million.
Media reports said Nutritek last year sold off its Western European dairy and agribusiness operations to focus on functional baby food production and markets in Asia and Eastern Europe.
It handled 440 tonnes of raw milk and employed 8000 staff and was Eastern Europe's first company to manufacture baby and infant nutritional products.
Founded in 1990, Nutritek's main shareholders are international investment foundations.
Overseas companies are looking to New Zealand to secure supplies of dairy products at a time prices are soaring and supplies are struggling to keep up.
Japanese corporation Mitsui has a 14% interest in Synlait, which is building a plant at Dunsandel.
Mataura Valley, which plans to start building a new dairy factory near Gore later this year, is partly owned by overseas interests.
