I disagree that it is a no-win situation for both companies - I think there obviously can be win here for A2M if they play their cards right, but there are undeniably risks too.
The 'win' scenario is this: A2M is able to successfully transition English label production to MVM in the next two years, without jeopardising Synlait's capacity to remain a viable operation capable of producing China label until its license expiry 2027.
The risk to me is primarily Synlait's financial and operational viability. A2M diversifying away from Synlait is a major challenge for Synlait. If not managed carefully it could impact China label simply by removing another revenue stream and increasing Synlait's financial woes.
I think you are right in highlighting the role of Bright. It doesn't necessarily need to be an adversarial relationship between A2 and Bright, especially if greater cooperation between them can help steer Synlait through the mess that it is in. That might also involve greater investment in Synlait by A2M though, something I am sure they are reluctant to do, but probably explains why their capital reserves still remain untouched.
I agree that a lot of us are simply speculating, I know I am, but I really don't see any sensible way for Synlait to 'weaponise' SAMR as they really have no power or alternative in the situation other than to continue producing China label for A2M.
The bigger likelihood is that they weaponise their own woeful debt situation and its possible blowback on A2M.
A2M Price at posting:
$4.33 Sentiment: Hold Disclosure: Held
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