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A2 seeks strategic review to accelerate growth

Wednesday 18th April 2012

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A2 Corp has tapped Sydney-based corporate advisers Greenhill Caliburn to undertake a strategic review of the business as major players in the dairy sector start to take notice of the NZAX-listed alternative milk company.

A2 has been approached by would-be partners and wants to review its options to speed up growth and maximise shareholder value, it said in a statement. That’s seen its board appoint Greenhill Caliburn as principal adviser, with support from New Zealand advisers Clavell Capital. The review is expected to take several months.

“We are conscious of ensuring that we lay the appropriate platform for growth in new markets and the next strategic steps we take are important to ensure we optimise shareholder value,” chairman Cliff Cook said. “This, coupled with recent approaches from industry participants, makes this the appropriate time to undertake a full review of our strategic options.”

Earlier this week A2 signed a supply deal with Canterbury-based Synlait Milk to manufacture A2 brand nutritional powders which it hopes to sell on the international market, particularly targeting infant formula for the Chinese market.

The shares fell 2 percent to 50 cents in trading yesterday, and have surged some 113 percent this year. Last month, the company raised $5.2 million in a share placement at 37 cents apiece, and it is valued at $302.3 million by market capitalisation.

Chief executive Geoffrey Babidge said the review will be based on the fact that “A2 is already well-positioned to maximise long-term growth standalone as well as considering partnership options to support expansion, in specific jurisdictions or more broadly.”

A2 expects to launch its product in British markets in September this year, and has formed a partnership with Robert Wiseman Dairies to do so.

The company claims its milk is healthier than traditional A1-type milk although those claims haven't been backed by scientific evidence.

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