Fonterra has dismissed speculation it is among potential bidders for India's Tirumala Milk Products.
The co-operative scotched a Times of India report naming it with French food conglomerate Danone as vying for a controlling stake in Hyderabad-based Tirumala, with a spokesman for the dairy exporter calling it "rubbish".
The $US450 million enterprise value figure reported would be material for Fonterra and would need to be disclosed, he says.
Global private equity firm Carlyle Group, which holds 20%, and Tirumala's five other owners have reportedly short-listed three investment banks to run the sale. The founders are expected to keep minority stakes.
Tirumala is the second biggest private supplier of liquid milk in India's southern states, with turnover of 117.5 billion rupees, or $NZ2.61 billion at today's exchange rate of 44.98 rupees per New Zealand dollar.
It processes 1.6 million litres of milk a day in a string of plants across India's southern states of Tamil Nadu, Andhra Pradesh and Karnataka.
India is the world's biggest dairy supplier, accounting for some 16% of total production, according to the National Dairy Development Board. The bulk of that is consumed domestically.
Last year, Fonterra embarked on a plan to look at the feasibility of farming in India as part of a government-led drive to forge closer ties with the world's 10th biggest economy.
Fonterra has identified rapidly growing emerging markets as a strategic target and has saddled India alongside China in the new management structure.