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a2 Milk firm targeted by takeover bid from Freedom Foods,
New Hope
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A2's unique appeal
Tony Perich, one of the nation's biggest dairy cattle owners.
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TheAustralian4:04PM June 22, 2015
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DAMON KITNEY
Victorian Business EditorMelbourne
@DamonKitney
The billionaire Perich familys Freedom Foods and an unnamed leading international liquid dairy milk company are the mystery bidders for listed milk company a2 Milk Co.
The consortium, which is believed to potentially include
China’s giant New Hope Dairy company, made an indicative, non-binding and conditional bid with a view to undertaking due diligence to determine to whether to enter a into a binding proposal.
A2 Milk Co (A2M) said this morning that it had received an expression of interest from two associated trade parties keen on taking over the company, which may force the firm to shelve a planned capital raising.
The parties had requested confidentiality and warned their expression of interest could be withdrawn if their names became public, a2 Milk said in a statement.
At 11.05am (AEST), a2 shares were 15.69 per cent higher at 59c. The shares closed at 51c on the ASX on Friday, giving the company a market capitalisation of around $323 million.
Earlier, the dual-listed shares climbed 23 per cent to 70c on the NZX this morning, the highest level since July last year.
The Auckland-based company, which is dual listed on the New Zealand and Australian exchanges, said the proposal was subject to conditions including access to due diligence exclusivity, approval under the New Zealand Overseas Investment Act, and no change in the number of shares on issue.
“The last condition is particularly relevant as the company was well advanced in planning for an equity raising,” the company said.
A2 Milk’s board is seeking further information to evaluate the proposal before updating the market.
In April the Perich family’s Leppington Pastoral Company partnered with New Hope, Freedom and Moxey Farms, one of Australia’s largest single-site dairy operations, in a consortium called Australian Fresh Milk Holdings.
Its aim is to transform Moxey into a world-class dairy farming operation and establish a scalable operating platform to invest in additional greenfield sites in southern NSW or northern Victoria for milk production.
Moxey supplies milk to a2.
The Perich family controlled Freedom is the single biggest shareholder in A2 with 19.14 per cent and increased its stake this month.
The Chengdu-based New Hope Dairy has established an investment fund of up to $500m to be spent on Australian agriculture.
Late last year, the Periches, Freedom and
New Hope struck a deal for part of these funds, along with money from the Perich family, to be invested in large-scale intensive dairy farms to bolster long-term milk supply.
Freedom has previously spoken of wanting to reduce its stake in a2 to 10 per cent.
A2 chief executive Peter Nathan is en route to China today and is believed to have had no contact with the bidders. A2 chairman Geoff Babidge is also en route overseas today.
First NZ Capital and Milford Asset Management also both gave notice of substantial shareholdings in a2 this month.
When a2 Milk listed on the ASX earlier this year it didn’t include a capital raising despite a launch into the US market with fresh milk which is budgeted to cost around $US20 million ($NZ29m) over the next three years.
The company markets its products as potentially being beneficial for people who suffer intolerance to the naturally occurring a1 protein in milk, including bloating and stomach pain.
A2 Milk has captured some 9.3 per cent of the Australian fresh milk market by selling milk that only has a2 protein.
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Here is something about
New Hope of China, a potential bidder...
(20min delay)