Co-operative ownership of Westland dairy company passes into history

The West Coast's century old dairy co-operative will pass into Chinese ownership on August 1.

This follows the High Court making the necessary orders to approve the 100 per cent sale of the Westland Cooperative Dairy Company to the Yili conglomerate - the third and last key condition that needed to be ticked off to seal the $588 million sale.

Westland's farmer-shareholders have voted for the deal and the Overseas Investment Office has approved the purchase by a Yili subsidiary.

Westland's 400 farmers will be paid $246m for their shares on August 1. The rest of the purchase price, $342m, is the assumption of Westland's debt and liabilities.

A Westland spokesman said Westland had been sold as a going concern, meaning the new owners would take over all existing staff arrangements, contracts and union contracts.

It was a distressed sale. Westland had not been paying a competitive milk price for several years and had high debt.

The Westland board controversially negotiated bonuses totalling $1.6m for six senior managers as part of the deal. The spokesman said none of the senior managers had left the company in recent weeks.

Yili also owns the Oceania dairy company in south Canterbury. The purchase of Westland, the biggest employer on the West Coast, brings its investment in New Zealand to around $1.2 billion.

Yili has committed to pick up all existing Westland supplier milk and to match Fonterra's milk price to farmers for 10 years.