UPDATE:A2 confirms Dean Foods is other party in possible bid
UPDATE: A2 confirms Dean Foods is other party in possible takeover bid with Freedom Foods
(Adds A2 confirmation of Dean Foods as prospective buyer)
By
Paul McBeth
June 24 (BusinessDesk) - A2 Milk Co has
confirmed media speculation that Texas-based food and
beverage company Dean Foods is the other party with Freedom
Foods that is contemplating making a takeover offer for the
milk marketing business.
Dual-listed A2 said it made
the disclosure at the request of the ASX in response to
media reports. The Australian Financial Review's Street Talk
column yesterday named Dean Foods as the second party in a
consortium seeking to buy A2, providing an alternative route
for the company, which markets milk with a variant protein,
to expand in the US. The AFR speculated the bid could be as
much as $2 a share, a massive premium to A2's share price of
57 cents before potential takeover became public.
"ASX has requested in response to media speculation that a2MC confirms the identity of the parties who submitted the expression of interest," the company said. "The parties are Freedom Foods Limited and Dean Foods Company. The board is continuing to seek further information in order to evaluate the proposal and will update the market on further developments as appropriate."
A2 shares climbed 8.5
percent to a 12-month high of 77 cents today.
Freedom
Food shares, which are majority owned by the Perich Group,
have gained 7.1 percent since the A2 announcement, and
traded unchanged on the ASX today at A$3.
A deal would be contingent on the consortium undertaking due diligence. It also has a restriction on A2 changing the number of shares on issue, effectively scotching a planned equity raising that has been in the pipeline.
Freedom Foods is
represented on A2's board by Mervyn Miles. Managing director
Geoff Babidge, general manager international development
Simon Hennessy, and chief executive Australia and New
Zealand Peter Nathan are also alumni of the ASX-listed
firm.
When A2 listed on the ASX earlier this year it didn’t include a capital-raising despite a three-year US$20 million launch into the US market with fresh milk.
The company markets its products as potentially
beneficial for people who suffer intolerance to the
naturally occurring A1 protein in milk, including bloating
and stomach pain. A2 has captured some 9.3 percent of the
Australian fresh milk market by selling milk that only has
A2
protein.
(BusinessDesk)