Australian private equity firm Archer Capital is looking for a joint venture (JV) partner in Asia for its Brownes Dairy unit.
As reported in the Wall Street Journal, the move comes in response to the dominance of retailers, which have sold own-brand milk at a less price for the past three years, making milk suppliers unprofitable.
The potential JV partner is expected to acquire significant stake in Brownes Dairy in $224m deal, which would help Brownes Dairy to distribute its milk products in markets across mainland China.
Brownes currently processes 144 million liters of milk from 61 dairy farms annually. It produces white milk, yogurt and flavoured drinks which are distributed across the Western Australian market.
The proposed partnership with an Asian partner will allow Brownes to record increased margins on milk sales.
Archer had earlier acquired Brownes Dairy from New Zealand-based Fonterra Co-operative Group. Other Australian dairy producers Norco Co-operative and Freedom Foods Group have also agreed to sell dairy products in China.
