China's Huishan Dairy Holdings Company Limited and Netherlands' Royal FrieslandCampina N.V. have reportedly entered into exclusive talks for creating a joint venture to produce and sell infant milk formula in China.
The purpose of the joint venture is to set up a fully integrated infant milk formula supply chain. With the joint venture, Huishan and FrieslandCampina will produce, market and sell high-quality infant milk formula in China. Meanwhile, Huishan's own dairy farms in China will provide high-quality raw milk to the joint venture and the joint venture will produce and market infant milk formula.
According to a representative from FrieslandCampina, after the establishment of the joint venture, both companies will continue to run their existing infant milk formula businesses separately.
In China, FrieslandCampina is known for Friso, a premium brand of infant formula and for selling ingredients to Chinese food and infant formula manufacturers. In November 2013, FrieslandCampina, Wageningen University & Research Centre and the China Agricultural University set up the Sino-Dutch Dairy Development Centre to improve dairy production, safety and quality levels throughout the entire dairy chain in China.
The formal agreement of the joint venture will be subject to conditions, including a due diligence review and other conditions commonly governing this type of transaction.