Lifeline for Synlait after vote to sell troubled milk plant

Friday, 21 November 2025

After a year fighting for survival, shareholders in Synlait have voted almost unanimously to sell the specialty milk producer’s North Island factory at Pōkeno with 99.99% in favour at their annual meeting today.

The $307 million sale to US healthcare giant Abbott marks the end of an ill-fated plan to plan to expand beyond the South Island, and marks a step change in Synlait’s balance sheet. Proceeds will be used to reduce debt.

Chairperson George Adams said the past financial year for Synlait’s board was best described “as a prolonged period of fire fighting”.

“To be here today is a real win that many of us thought would be impossible, and I'm glad we fought for that.”

The major hurdles that had been overcome during the year included solvency of the business, settling disputes with the a2 Milk Company, raising $218 million in new equity, securing milk supply, “and just when we thought we were through all of that, resolving a number of challenges in manufacturing at Dunsandel”, he said.

Synlait was established in 2000 to provide an alternative processor to Fonterra, and listed on the NZX in 2018, gaining a major shareholder in China’s Bright Dairy. In 2019 the company made over $1 billion in revenue and started processing milk at a new site in Pokeno.

It acquired consumer brand Dairyworks the year after.

But spending on the new Pokeno plant, another liquid plant at Dunsadel in Canterbury, and the purchasing of consumer brands increased the company’s debt to unsustainable levels, while Covid-19 introduced huge volatility to the market. On top of that, in 2023, a2 Milk cancelled its exclusive supply agreement with the company for certain infant formula products.

Synlait has spent the last few years recalibrating its business, selling off its consumer brands and its North Island assets and focusing on its advanced nutrition powders and food service products. Last year it recapitalised, involving major shareholders Bright Dairy and the a2 Milk Company increasing their stakes while injecting $217.8m.

The board has agreed it would remain as six directors with the departure of independent director Paul Washer, who joined the board in 2022.

Adams said the reduced board would not fully comply with the NZX corporate governance code, including the preference for an independent director to chair the audit risk committee. The arrangement would be reviewed in May and the board remained committed to strong governance and transparent reporting.

But Shareholders Association chief executive Oliver Mander challenged the recomposition of the audit and risk committee with Washer’s departure and a key shareholder protection in terms of ensuring an independent chairperson of that committee.

Adams responded that the board remained in compliance with the NZX requirements, although it was not in compliance with the NZX code of best practice but “I'd like to see us move back towards best practice”.

The intention was to revisit the board structure in May including the number of independent directors, he said.

Former National Party finance minister Ruth Richardson said the impact of the company’s quality failures would flow through to the next financial year and asked what would the fix look like.

Adams said there were “no silver bullets to any one particular issue”. Money had to be spent upgrading facilities. A full review was conducted to figure out how to improve processes including laboratory and testing processes and improve the capability of people.