Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Freedom Foods sells remaining stake in milk marketer a2 Milk

Freedom Foods sells remaining stake in milk marketer a2 Milk for A$64 mln

By Fiona Rotherham

Nov. 17 (BusinessDesk) - A2 Milk Co’s cornerstone shareholder, Freedom Foods Group, has sold its remaining 10.4 percent stake in the milk marketing company for A$64 million, taking advantage of a surge in the share price.

Sydney-based Freedom Foods sold its remaining shares for 85 Australian cents apiece and will reinvest the proceeds in other investments including a buy-out of oat-based cereal and snack manufacturer Popina and construction of a new UHT processing facility.

Freedom Foods, which is controlled by the Perich family, said last month that it intended to maintain a strategic stake in the company and continue supplying it with production capabilities and milk supply. It had then sold 42.5 million shares, reducing its stake from 17.9 percent, after its punt at a takeover with Texas-based food and beverage company Dean Foods was rejected by a2's board as inadequate. It had originally built up a cornerstone stake of 19 percent.

Recent significant share price appreciation in a2 had led the group to form the view that the “opportunity cost arising from the market value of the funds now employed in the holding would now be better utilised by being applied activities and businesses in respect of which the group has either 100 percent ownership or significant ownership and control interests,” Freedom Foods said in a statement to the Australian stock exchange.

A2 Milk’s share price is up 5.1 percent to 88.25 Australian cents on the Australian stock exchange and 6.6 percent to 97 cents on the NZX. The shares have jumped 31 percent in the past week on the NZX following reports of growing demand in Australia for infant formula.

Freedom will continue to provide a2 with production capabilities and milk supply through its group and associated entities, it said.

A2 chief executive Geoff Babidge was unavailable for comment.

At its annual meeting in Auckland today, a2 raised its forecast revenue and earnings for the current year as sales of infant formula across Australasia and in China track ahead of expectations. It now expects earnings before interest, tax, depreciation and amortisation of $22 million on revenue of $285 million in the year ending June 30, 2016. That's an improvement on the previous forecast for earnings of $12 million on sales of $267 million, and up from ebitda of $4 million on revenue of $154 million in 2015.

The company today said its a2 Platinum-branded infant formula generated sales of $38 million in the four months ended Oct. 31, or about 47 percent of group revenue, and are tracking ahead of plan in Australia, New Zealand and China. That compares to annual infant formula sales of $41.7 million in the 2015 financial year.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Commerce Commission: Warns Genesis Over Business Billing Errors

The Commerce Commission has issued a warning to Genesis Energy Limited about billing errors concerning electricity line charges to business customers. Genesis reported the errors to the Commission. The Commission considers that Genesis is likely to ... More>>

QV: Tax Changes Yet To Dampen Red-Hot Housing Market

Just over a month has passed since the Government announced measures aimed at dampening the rampant growth of the property market, and yet the latest QV House Price Index data shows the market hit a new high in April. The average value increased 8.9% nationally ... More>>

Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

The Conversation: Why Now Would Be A Good Time For The Reserve Bank Of New Zealand To Publish Stress Test Results For Individual Banks

Set against the backdrop of an economy healing from 2020’s annus horribilis , this week’s Financial Stability Report (FSR) from the Reserve Bank (RBNZ) was cautiously reassuring: the country’s financial system is sound, though vulnerabilities remain. More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>