French dairy giant Danone on Thursday said it will buy milk powder factories in New Zealand to make up for supplies lost when it ended its supply contract with Fonterra last year.

Its local subsidiary Nutricia will buy Gardians drying plant and Sutton Group's blending and packing plant in Auckland, allowing it to maintain and possibly increase its exports to China.

Danone's net profit slumped 15 percent in 2013 after a food safety warning by key supplier Fonterra last year forced the group to launch a massive recall in Asia.

"This transaction will provide Nutricia with a large milk drying capacity, along with a long-term fresh milk supply access," the company said in a statement.

"It will also add an infant formula blending and packing facility to Nutricia's existing operations platform."

The purchase its subject to regulatory approval and is expected to complete in the next few months, Danone added.

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DANONE