Key Points:

Fonterra may be planning to sell its stake in the Chinese dairy venture at the centre of the milk scandal that killed four babies and caused illness in 53,000 children, news agency Bloomberg is reporting today.

Fonterra, the world's biggest dairy exporter, said talks were under way on a third-party acquisition of Sanlu Group. The Auckland-based group owns 43 per cent of Sanlu, which was the first of 22 companies in China identified as producers of contaminated baby-milk powder.

"Discussions are continuing around a number of facets of Sanlu's future," Fonterra chief executive, Andrew Ferrier told Bloomberg. "These include the possibility of Sanlu being acquired by a third party."

Last month Fonterra wrote down the value of its Sanlu stake by 69 per cent, or $139 million, because of damage to the company's brand.