In the season before that, Fonterra paid $6.52/kg compared with Westland's $5.18/kg.
Yili's South Canterbury-based dairy company, Oceania, matches the Fonterra milk price, then adds 15c/kg.
The proposed sale is to Hongkong Jingang Trade Holding Co, a unit of Inner Mongolia Yili Industrial Group, is at $3.41 per share.
Last year, the Government - through its Provincial Growth Fund - controversially loaned Westland $10 million.
The loan included a clause allowing the Governmen to exit the deal in the event of a major change in ownership.
Westland's profit for the year to July 2018 came to just $560,000, down from $1.5 million a year earlier, and the last annual report puts its total interest bearing borrowings at $232.8 million.
Morrison said the board believed the deal represented the best available outcome for shareholders
The acquisition price represented an attractive price to the Westland shares' nominal value, he said.
Westland will seek shareholder approval for the deal at a special shareholder meeting, which is expected to be held in early July.
Under the proposed transaction, shareholder farmers who are existing suppliers upon the implementation of the scheme will receive the benefit of Westland's commitment to collect milk and pay a competitive payout of a minimum of the Fonterra farm gate milk price for 10 seasons from the season starting August 1.
Yili is the largest dairy producer in China and Asia and has a strategy to grow both its domestic and global businesses.
The company acquired Oceania Dairy in 2013 and since that time it has invested $650m in establishing milk powder, infant formula and UHT production lines for Oceania.
Morrison said the board had engaged with over 25 parties in a competitive process to seek indications of interest in a cornerstone investment in Westland or a full acquisition or merger.
Australian media speculated that one of the parties was Canada's Saputo, which successfully took over troubled Victoria dairy co-op, Murray Goulburn, last year.
The deal will be by way of a scheme of arrangement and requires the approval of 75 per cent or more of the votes of shareholders who vote; and more than 50 per cent of the votes of all shareholders entitled to vote.
It also requires High Court approval, consent under the Overseas Investment Act, and other conditions.
The co-op turned in a $17 million loss over 2016/17 and its payout in that year was barely at break even for most of its suppliers.
Former Danone executive, Toni Brendish, was brought in as chief executive in September 2016.
Like many others, Westland found itself caught up in all the excitement around a very high milk price of around $7 or $8 a kg in 2013/14.
On the back of that, management made some big investments in Westland's infant formula and UHT capaccity.
"Both were great decisions but, fundamentally, how we executed them was the issue," Brendish told the Herald in an interview early last year.
The sale to Yili comes at a time of flux for the dairy industry in Australia and New Zealand.
Fonterra, which reports its interim result tomorrow, is in the process of selling assets - including icecream maker Tip Top - to reduce its high debt load.
One of Fonterra's key competitors domestically, Goodman Fielder NZ, is now part of the Singapore's Wilmar following the decision to go take over the 50 per cent of the wider Goodman Fielder group that it does not already own.
Goodman Fielder NZ last year reported a $14.6m loss.
Following on from last year's sale of Murray Goulburn sale to Saputo, Australia's Lion has put its dairy and drinks division up for sale.
