New Zealand dairy giant Fonterra is taking action to assume complete control of its Soprole division in Chile.

Fonterra chief executive Andrew Ferrier hopes to buy the 43% stake in Soprole that the company does not own and fold it into its Dairy Partners Americas venture with Swiss food manufacturer Nestlé.

However, Fonterra's Chilean partner, the charitable foundation Fundacion Isabel Aninat de Undurraga, is likely to resist being bought out. One possible outcome is that Fonterra, Fundacion Isabel Aninat de Undurraga and Nestlé put together a three-way partnership, reported the Dominion Post.

Such a proposal may provoke criticism from competition authorities, however, as the combined weight of Nestlé and Soprole would create a behemoth with some 47% of the market.

Soprole is one of Chile's largest dairy companies, with 2004 sales estimated to exceed US$245m.