Fonterra said it would spend $29.3 million on taking a stake Chilean milk processor Prolesur, lifting its stake to just under 100 per cent.
The co-op said it had bought the interest in Prolesur, held by Fundación Isabel Aninat, as it sought to streamline its operations in Chile.
The transaction will take Fonterra's ownership in Prolesur from 86.2 per cent to 99.9 per cent.
Prolesur is a milk processor in southern Chile which sells most of its production to the consumer brands company Soprole, which is also just under 100 per cent owned by Fonterra.
Fonterra's chief executive for Africa, Middle East, Europe, North Asia and the Americas, Kelvin Wickham, said the move would allow Fonterra to simplify the interface between Prolesur and Soprole and take steps to better integrate the two businesses.
"Prolesur and Soprole are both strong businesses but their recent performance has been impacted by challenging market conditions," he said.
"Having the two more closely integrated will generate operating efficiencies across the supply chain from milk collection, to processing and administration," he said.
The remaining 0.1 per cent of Prolesur's shares are held by minority shareholders, which Fonterra will offer to purchase at the same price per share being paid to the Fundación for its shareholding.
Early this year, Chilean charity foundation Isabel Aninat, a 13.6 per cent shareholder in Prolesur, made a complaint against Fonterra's appointed directors on the Prolesur board.
Soprole, a consumer product business operating in the north, sources about 30 per cent of its daily fresh milk from Prolesur. Fonterra, New Zealand's biggest company, said at the time complaint was at an "informal investigation" stage by an appointed prosecutor.