Synlait to pay $56.5m for Mangere canning plant

John Penno says the purchase will allow the company to meet current demand, as well as provide some room to grow.

South Island dairy company Synlait Milk says it will spend $56.5 million on buying Mangere-based New Zealand Dairy Company (NZDC) so that it can lift its blending and canning capacity.

NZDC is building a blending and canning operation at a site at Mangere and the site will now be owned by Synlait, the company said in a statement.

Synlait managing director and chief executive John Penno said the purchase would allow the company to meet current demand, as well as provide some room to grow. Synlait already has a canning plant in Dunsandel, in Canterbury.

"Having a second blending and packaging site will also begin to mitigate some risk we have faced as a single site manufacturing company," he said.

The capital investment includes a gross payment of $33.2m on acquisition, with Synlait expecting to spend a total of $56.5m once the plant is commissioned.

Synlait said it would seek certification from New Zealand and Chinese authorities for the plant to gain export registration.

The production line will be very similar to the blending and canning plant in Dunsandel, with the same scale, high standards, equipment and build specifications, Penno said.

Commissioning of the new facility is scheduled for October.

In a separate statement, Synlait said its opening milk price for the coming season was $6.50 per kg of milksolids, the same as Fonterra's forecast.