Dutch FrieslandCampina and China Huishan Dairy Holdings enter into exclusive talks on joint venture for infant milk formula in China

8 May 2014

China Huishan Dairy Holdings Company Limited (‘Huishan’) and Dutch dairy company Royal FrieslandCampina N.V. (‘FrieslandCampina’) have entered into exclusive talks on creating a joint venture to produce, market and sell high-quality infant milk formula in the People’s Republic of China. The purpose of the joint venture is to operate a fully integrated infant milk formula supply chain. Both companies will continue to run their existing infant milk formula businesses separately.

In this joint venture, Huishan and FrieslandCampina will leverage their respective experience and expertise to produce, market and sell high-quality infant formula products in the People’s Republic of China. Huishan will provide its high-quality raw milk from its own dairy farms in China to the joint venture and the joint venture will produce and market infant milk formula.

The two companies will continue to run their existing infant formula businesses separately. As such, Huishan will carry on marketing its own brands. And FrieslandCampina’s Friso® brand will still be exclusively produced in the Netherlands and marketed by FrieslandCampina.

Huishan and FrieslandCampina believe that the proposed joint venture will benefit from their respective production, sales and marketing capabilities. The companies already successfully cooperate in the production of non-dairy creamers.

Huishan is a leading and the most vertically integrated dairy company in the People’s Republic of China. Its business covers the entire dairy value chain, from growing and processing of alfalfa and supplementary feeds to dairy farming and processing and sales of dairy products under the Huishan brand. Huishan’s branded liquid milk products have the highest market share in the north-eastern provinces of China.

In the People’s Republic of China, FrieslandCampina is known for Friso®, a premium brand in infant formula and for selling ingredients to Chinese food and infant formula manufacturers. In November 2013, FrieslandCampina, Wageningen University & Research Centre and the China Agricultural University set up the Sino-Dutch Dairy Development Centre to improve dairy production, safety and quality levels throughout the entire dairy chain in the People’s Republic of China.

The Formal Agreements will be subject to conditions precedent, including a due diligence review and other conditions commonly governing this type of transaction.

China Huishan Dairy Holdings Company Limited

Huishan is a leading and the most vertically integrated dairy company in China. Huishan’s business model covers the entire dairy value chain from growing and processing of alfalfa and supplementary feeds and the processing of concentrated feeds to dairy farming and processing and sales of dairy products under the “Huishan” brand, a trusted label with impeccable product safety records that stands for premium product quality.

The history of “辉山 (Huishan)”brand can be traced back to the early 1950s when it began to appear in association with dairy product sales, at the time when “辉山牧场” (Huishan Dairy Farm), one of the oldest dairy farms in China, was founded in Liaoning Province, China. Today, Huishan controls approximately 440,000 mu (= 30,000 ha) of farmland for alfalfa and other feeds plantation, operates more than 50 dairy farms housing China’s largest Jersey cow herd and second-largest Holstein cow herd. Huishan’s dairy farms produce raw milk meeting EU standards with an industry-leading yield. Huishan’s branded liquid milk products have the highest market share in the north-eastern provinces of China. For more information, please visit: www.huishandairy.com