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A2 doubles stake in Synlait at 2.3% discount

Friday 3rd August 2018

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A2 Milk will buy another 8.2 percent of Synlait Milk at a small discount, lifting its holding in the dairy processor to 17.4 percent.

The milk marketing firm will buy the shares at $10.90 apiece, down 2.3 percent from the NZX one month volume weighted average price of $11.16, for a total of $161.8 million. The shares will come from Tokyo-listed Mitsui & Co, a general trading company which invests across sectors and bought 8.4 percent of Synlait at the company's initial public offering in 2013.

A2 already owned 9.1 percent of Synlait. It bought 8.2 percent of the shares from Dutch dairy processor Royal FrieslandCampina in March 2017, building on the existing supply agreement between the milk marketer and dairy processor, and acquired a further 0.9 percent in April this year, a spokesperson said. Share purchases below 1 percent do not trigger the NZX's substantial security holder disclosure requirement.

Last month, the companies agreed to extend their infant formula supply deal and increase the volume of formula Synlait will supply as the two continue to focus on sales in the lucrative Chinese market.

"This investment in Synlait is consistent with the A2 Milk Company’s commitment to long-term supply arrangements with high-quality partners such as Synlait Milk and Fonterra Cooperative Group," A2's managing director Jayne Hrdlicka, who took over the role on July 16, said in a statement.

"This supply agreement will continue to be the cornerstone of the commercial relationship between the two parties. A2 has no plans to further increase its shareholding in Synlait," it said.

Synlait's shares recently traded at $11.07, up 3.5 percent today, and have gained 49 percent this year. A2 shares rose 1.2 percent to $10.56. 

(BusinessDesk)

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