Commission Clears Way For Partnership

23 February 2006

Commerce Commission Clears Way For Foodstuffs And Fonterra Partnership

Foodstuffs Lower North Island and Fonterra today welcomed the decision by the New Zealand Commerce Commission which clears the way for the companies to enter into a long term partnership.

The $169 million agreement establishes Fonterra as Foodstuffs preferred milk supplier. Fonterra will supply milk for the Pams brand to Foodstuffs members throughout the lower North Island.

"The partnership not only secures a milk supply for the group at competitive prices but will see Foodstuffs and Fonterra working closely together to develop new products," says Foodstuffs Lower North Island Managing Director Tony McNeil.

Fonterra Brands New Zealand Managing Director Peter McClure says the agreement provides strong potential for growth.

"The partnership will improve our distribution throughout the lower North Island and provides growth opportunities for not only Pams but Anchor milk in the region."

Under the partnership, Fonterra will also take over Kapiti Fine Foods which in addition to manufacturing milk for the Pams brand, manufactures niche, high value ice cream and cheeses that will complement Fonterra's existing product range. Fonterra's marketing expertise and global infrastructure will potentially accelerate the growth of these premium brands into key export markets

The agreement is effective from 31 March 2006.

ENDS

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