'No further' takeover talks with Dean Foods and Freedom Foods: a2 Milk Company


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'No further' takeover talks with Dean Foods and Freedom Foods: a2 Milk Company

Related tags A2 milk company Dean foods A2 milk brand Milk

The a2 Milk Company (a2MC) has had "no further communication" with Dean Foods and Freedom Foods since it rejected the takeover bid tabled by the pair.

In a statement accompanying its full-year results, published yesterday, a2MC said it has not been approached by Dean Foods or Freedom Foods for follow-up talks.

"We have had no further communication with either Foods Foods Group Limited or Dean Foods Company since we advised that the proposal in the Expression of Interest was not compelling,"​ it said.

In July, a2MC rejected a joint takeover bid by Australian firm, Freedom Foods, and Dean Foods, America's second largest dairy.

In a statement issued on July 20, a2MC said it would not recommend the proposed deal to its shareholders as it "does not consider that the proposal in the EOI is compelling."

It informed Freedom Foods and Dean Foods, however, that despite the knock back it was "willing to have a discussion in relation to the EOI."

It added it had received "other confidential enquiries indicating potential interest in the Company"​ and that it was "in the course of evaluating these."

Net loss

Given the dramatic rise of the a2 Milk brand, interest in a2MC is unsurprising.

a2 Milk is rich in beta casein protein, but contains no A1 beta casein protein, which has been linked to digestive discomfort.

In Australia, a2 Milk controls a 9% value share of the country's fresh milk market. Cream, ice cream and yogurt are also sold under the a2 Milk brand Down Under.

a2 Milk is now also available in the UK and US, and sales of a2 Platinum infant formula in Australia, New Zealand and China are growing.

a2MC reported revenue of NZ$155.1m (US$102.8m) for the year ended June 30 2015 – an increase of 40% on the NZ$110.6m (US$73.3m) it recorded last year.

“The Company’s growth initiatives continue to progress in a very positive manner and the results of this are now evident in the FY15 trading results. The Australian business continued to perform very strongly and returned a record result for the region,”​ said Geoffrey Babidge, managing director, a2MC.

“The growth in a2 Platinum infant formula in ANZ and China was exceptional and provides a potentially significant earnings contributor for the future. We were also pleased with the commencement of sales activities in the USA milk market and repositioning our product offering in the UK market.”

Despite the sales boost, a2MC reported a net loss for the year of NZ$2.09m (US$1.38m) – a result it attributed to the “costs associated with the ASX listing and employee share scheme expenses.”

Related topics Business Oceania Dairy

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