Fonterra has walked away empty handed from talks to buy one of Argentina's leading dairy producers, according to reports from the South American country.
Media in Buenos Aires say that SanCor has been bought by another Argentinian agricultural firm, Adecoagro.
A report in Argentina's La Nacion said Fonterra had been outbid by Adecoagro. Fonterra initially offered US$330 million ($450m), but Adecoagro offered US$400m, the report said.
However, the Herald understands that while Fonterra had been in talks with SanCor, it had not reached the stage of putting forward a formal offer.
A spokesman for Fonterra declined to comment, but chairman John Wilson last year confirmed that the co-op had been in talks with SanCor.
La Nacion said Fonterra had been viewed as the preferred candidate to take over SanCor.
SanCor is one of the leading dairy producers in Argentina, accounting for one fifth of the total production in the country and 90 per cent of the country's dairy exports.
The co-operative was estimated to be worth between US$200m and US$400m, La Nacion said.
Adecoagro is involved in a range of businesses, including farming crops and other agricultural products, dairy operations, sugar, ethanol and energy production and land transformation.
Fonterra already has extensive interests in Latin America.
In Chile, the dairy giant Saprole is Fonterra's oldest offshore investment, and is the best known corporate brand locally outside of Coca-Cola.
Fonterra is also a significant player in the US$26 billion-a-year dairy market in Brazil.
SanCor is a dairy farmers co-operative, producing skim milk powder, butter, gouda cheese, edam, and cheddar. The company was founded in 1938 and is based in Sunchales, Argentina.
It is the second rebuff for Fonterra after last year's merger proposal put to the financially troubled Australian co-op Murray Goulburn was unsuccessful.
Murray Goulburn's shareholders this week approved the sale of their co-operative's operating assets and liabilities to Canada's Saputo for A$1.31b ($1.38b).
The sale has been cleared by Australia's competition regulator, the ACCC, on the understanding that Saputo would sell Murray Goulburn's Koroit factory.
It is still to be approved by Australia's Foreign Investment and Review Board, but it is not expected to meet with any resistance from the regulator.
Saputo produces, markets and distributes in Australia and on the international market a variety of cheeses, butter and butter blends, milk and cream. The company has Warrnambool cheese and butter in its Australian stable.
Murray Goulburn chief executive Ari Mervis told this week's meeting of shareholders and unit holders that Saputo was a trusted dairy processor in Australia.
"Saputo recognises that in order to run efficient production facilities they need profitable dairy farms and a profitable industry, supported by strong milk prices."
Murray Goulburn's financial problems emerged early in 2016, when managing director Gary Helou resigned after the co-op slashed profit and payout forecasts - less than a year after the co-op floated instruments on the ASX.
Problems started to mount for the co-op when it continued to pay farmers high prices despite sharply lower world dairy prices.
In January, Fonterra Australia announced plans to spend A$165m on key factory sites in Victoria and Tasmania to increase capacity needed to process the extra milk that now flows its way - much of it from former Murray Goulburn suppliers