Shares in Bega Cheese have surged to a record high after Fonterra bought a 6% stake in the New South Wales company for $AUS46 million.
The news of Fonterra's share buy-up sent Bega shares to a record high of $AUS4.94, before closing at $4.83, up 42 cents or 9.5% on Friday.
Fonterra already licenses the Bega brand and has a cheese supply contract with the Australian company.
Fonterra chief executive Theo Spierings says Australia is an important market for the dairy firm, and it is committed to increasing its presence there.
He says there has been a lot of consolidation activity in the Australian dairy industry and it is important that Fonterra participates.