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Bright Dairy cleared to creep higher after Synlait Milk float

Monday 15th July 2013

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China's Bright Dairy & Food can build its stake in Synlait Milk back up to 41 percent once the dairy processor has joined the stock exchange later this month.

The Takeovers Panel granted an exemption to the Synlait Milk shareholder for Bright Dairy to keep its stake at 41 percent by purchasing shares on-market if the initial public offer diluted its investment below that level.

Bright Dairy, which doesn't plan to participate in the IPO and will end up with about 39 percent after the July 23 float, can buy on-market until July 14 next year. The Chinese company can't sell or dispose of any shares during the period.

One of the Takeovers Panel's conditions for granting the exemption was for the IPO prospectus and Synlait Milk website to "prominently" state Bright Dairy's top-up ability. That notice was, in turn, seen as the rationale that investors buying into the float would be aware of the exemption and take that into account when making an investment decision.

The exemption notice first appears on page 3 of the prospectus, and is one of six links on Synlait Milk's website relating to the offer.

Last week, Netherlands-based cooperative Royal FrieslandCampina emerged as a shareholder in the Synlait Milk float, joining Bright Dairy and Japan's Mitsui & Co as major shareholders in the local dairy processor.

The Rakaia-based company plans to raise $75 million of new capital, and existing shareholders will sell $38.7 million in a secondary offer, both at $2.20 a share.

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