Shareholders in Australian butter and cheese producer Bonlac Foods will vote on a plan that would see New Zealand dairy giant Fonterra lift its stake in Bonlac to 50%.

Fonterra currently holds a 25% stake in Bonlac and is seeking to acquire a further 25% from Bonlac Suppy, the farmer cooperative that supplies milk to Bonlac Foods.

Given that there are no other options on the table, Bonlac is urging shareholder to approve the plan, ending months of uncertainty. The move would enable Bonlac to cut costs and improve EBIT (earnings before interest and tax) by some A$35m (US$23m) to A$38m per year.

In exchange for the bigger Bonlac stake, Fonterra agreed to buy all of Bonlac's production, which will cut Bonlac's costs, increase its revenue and improve its working capital position, reported Reuters.

A shareholder meeting is expected to be called for 5 September.