The Overseas Investment Office has approved the sale of the cash-strapped Westland Milk dairy co-operative to a foreign buyer.
The West Coast dairy company's 350 farmer shareholders voted overwhelmingly this month in favour of selling up to China's Yili dairy conglomerate, which already owns Oceania Dairy in South Canterbury.
The $588 million deal needed approval from the OIO because Yili is buying significant business assets worth more than $100m and 4.8 hectares of residential land currently used for factory worker accommodation at Westland's two processing plants.
The purchase still requires approval at a High Court hearing, set for this Thursday.
A group of former shareholders, who are owed money by the co-op and sought to be paid out before the purchase, asked the OIO to delay the application.
However, Land Information New Zealand's Overseas Investment Office manager Vanessa Horne said that Yili met all the requirements needed to buy Westland, and that matter fell outside the office's scope.
"This is a commercial issue for the former shareholders to resolve with the new Westland owners," Ms Horne said.
"The law is straightforward about what the OIO can take into account when assessing applications, and these sorts of issues fall outside it," she said.
The deal does still requires High Court approval, with a hearing set down for Thursday.
Yili Group chief executive Jianqiu Zhang said Yili would look forward to the outcome of that hearing.
"We are very hopeful that our offer will be accepted by the High Court so that we can work towards creating a strong and secure future for one of New Zealand's most trusted brands," Mr Jianqiu said.
If the sale is allowed by the High Court, farmer shareholders will receive an immediate cash payment of $3.41 per share, as well as a 10-year guaranteed competitive milk payout.