A2 Milk, one of the share market's hottest stocks, has increased its stake in close commercial partner Synlait Milk.
It's buying an 8 percent share holding from Japanese investment company, Mitsui, for $161.6 million. That will increase its stake in the Canterbury-based specialty milk producer to 17.4 percent.
Synlait produces infant formula for A2 Milk, which is in strong demand in Australia and China, and has helped to drive that company's profits and share price over the past two years.
In July, the two companies extended their cornerstone commercial agreement for the supply of infant formula and other dairy products.
"This investment in Synlait is consistent with the A2 Milk Company's commitment to long-term supply arrangements with high quality partners such as Synlait Milk and Fonterra Co-operative Group," A2's managing director, Jayne Hrdlicka, said.
She said her company had no plans to buy any more of Synlait.
The two companies have been among the best market performers over the past year.
Synlait has started a $385m programme to build a new manufacturing plant at Pokeno, south of Auckland, and expand its base plant in Dunsandel.