Fonterra already has a near monopoly in the dairy sector, with its next biggest competitor being Open Country Dairy.
Synlait is a distant third.
Dual-listed a2 Milk owns 19.8% of Synlait, which is the company’s biggest supplier of infant milk formula.
China’s Bright Dairy went to a majority 65% holding in Synlait last year after a major restructuring of the then debt-laden firm.
A2 Milk, a marketer of formula which counts China as its main market, became a manufacturer in its own right when it bought Yashili’s facility at Pōkeno last year.
However, Synlait remains a2 Milk’s main supplier of formula and a2 Milk is its biggest customer.
A2 Milk chief executive and managing director David Bortolussi said the company has “a great relationship” with both Synlait and Bright Dairy.
“The acquisition of the Pōkeno plant and the subsequent investment in the plant is indicative of our strategy going forward,” he said.
By early afternoon, Synlait’s share price had gained 3.5c to 40.5c.
A2 Milk, which earlier reported a fall in net profit, fell 28c or3.4% to $7.92 but well off its lows for the day.
Fonterra’s NZX-listed units gained 5.6c to $7.046.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
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