JEDDAH: A New Zealand company is in talks to purchase Saudi dairy firm SADAFCO (Saudia Dairy and Foodstuff Company). The deal is likely to be finalized in January. But SADAFCO and New Zealand’s Fonterra have denied the news that a deal has already been made.

Newspapers in New Zealand reported on Wednesday that the Saudi firm was taken over by Fonterra, the world’s No. 1 dairy exporter, which controls 49 percent of SADAFCO through a joint venture known as Saudi New Zealand Milk Products.

A statement sent to Arab News by Fonterra on Thursday described the news as “incorrect,” saying the company has “reached a conditional agreement with SADAFCO to purchase their 51 percent stake in our joint venture, Saudi New Zealand Milk Products. We expect settlement to occur in early January.”

The joint venture referred to in the statement was formed in 1991 and it gives the company a presence in a major dairy market of the Middle East.

A SADAFCO executive in Jeddah, declining to be named, also said that the news of buyout was premature.

“It is still in the discussion stage. We are evaluating the offer. Nothing further could be said at this stage,” he maintained.

SADAFCO is the Kingdom’s No. 3 dairy firm by market value. In addition to dairy products, the company produces juices, tomato paste, ketchup, hummus and snacks. The flagship Saudia is one of the strongest brands in the Kingdom.

In June, SADAFCO’s Chief Executive Matthijs Waltherus told Reuters that his company was interested in “merging or in acquiring.” He made the observation while expressing his ignorance about any purchase offer by Almarai, the Gulf’s largest dairy firm by market value.

“We are not seriously negotiating. Our priority is autonomous growth,” he said. “We are interested to merge or acquire, but these things are easier said than done in this region ... We would like to grow. We don’t have any potential candidates on our board at this stage.”

SADAFCO plans to invest up to SR60 million in the year to March 2010 mainly to boost production capacity and to develop its distribution chain.

“Over the next five years, we can double our autonomous capabilities,” Matthijs said.

Kuwait-based United Industries Company and Global Investment House respectively hold 30.1 and 8.9 percent stakes in SADAFCO.