ATM - A2 Milk Corporation Limited [Archive] - Page 17

NZSilver

01-07-2015, 07:55 PM

You could be right there NT, I didn't think of the Chinese issue in the states, however a lot of US stuff is manufactured in China anyway (however interestingly more is moving back to Mexico) . I figure having a large Chinese company like JB owning a chunk of A2 means plenty of exposure and the would probably market a2 more if they own part of it. However a Chinese dairy giant could use its current infrastructure to distribute a2. Much like Dean's could do in the U.S. If they owned a portion of A2.

Basically it would reduce a lot of risk that a2 faces in its new markets and speed up their market penetration.

Also gets other dairy companies interested, and if a2 is going to get a full takeover and we loose our shares in the company, at least there is a few parties interested and we make a few bucks...

Would like to hear what's going on, hopefully an announcement by weeks end.

QFD Sage

01-07-2015, 08:32 PM

I'm keen to hear some news. I thought the ATM board was meeting in London this week. Does anyone know if that is correct? If so, you would expect announcement tomorrow or Friday.

airedale

01-07-2015, 09:01 PM

The SP closed at its high for the day, usually a sign of upward momentum.

Harrie

01-07-2015, 09:34 PM

even if it all this takeover talk turns to custard ATM would still of benefited from the very thing it needs most and for free.....that is market exposure.
What could possibly develop out of the current circumstances that is negative for the company.

Thats pretty well much what I have been saying too snapiti.could not agree more.
i think the Chinese relationship you are talking about NT is more of a gov't issue rather than a business one. Business will do what is in the interests of business first and foremost. Where there is profit there will be business. A lot of Chinese USA business relationships exist already.
ideal situation would be a 51% majority Dean's JD, freedom and continuation of NZ ownership.

see weed

01-07-2015, 09:52 PM

The SP closed at its high for the day, usually a sign of upward momentum.

That's right. Firstly, thank you to anyone here who sold me their shares today. From 2/6/15 to 22/6/15 (T.Over announcement date) 73,000,000 odd shares were bought before announcement. From 23/6/15 to now, another 32,000,000 bought. A total of 105,000,000 approx.I get this feeling the more sold, the less there will be to go around. If anyone here would like to sell me some more I am willing to pay up to ...c:). Also get this feeling there is a good announcement coming soon with all this buying going on, Nudge nudge wink wink.

see weed

01-07-2015, 10:03 PM

What a you think...79c by weeks end? then takeover offer $1.20c . They won't be getting mine for $1.20c, maybe 3% of my holding , but that's all.

NT001

01-07-2015, 10:09 PM

What could possibly develop out of the current circumstances that is negative for the company.

I certainly agree the present takeover discussion enhances a2MC's marketplace image and chances of doing well. I also agree there are some takeover outcomes that could be beneficial to both the company and its present shareholders. One includes a collapse of the present takeover proposals.

But there are many other scenarios, and some would not be all that beneficial to shareholders and/or the company. Of course it depends a bit what kind of shareholder you are, and how you view the company's objectives. Do you want a quick profit and then say bye-bye, or do you have an attachment to the company and want to be a longterm holder?

The company originally had a dual mission, to operate profitably and to spread the A2 message globally for health reasons. Many shareholders will say the second is just an irrelevant pious wish, but there are still some who have a strong sense of loyalty to the company and would like to see both objectives realised, which will take time. We would hate it to be taken over by Big Dairy interests who will become very disenchanted when the medical risks of their A1 milk become better known, and possibly try to bury the message.

As an incidental aside, I am currently in remission from cancer and am on a detailed diet and lifestyle regime aimed at repairing the damage to my immune system caused by the chemo and steroid treatment I received (they don't tell you much about this serious downside of being "cured" of cancer). Interestingly, my diet bans cows milk. Why? Because cows milk usually contains A1, which is now starting to be recognised as potentially damaging to the immune system that defends us against disease, including cancer. Goats and sheeps milk are okay - they're guaranteed a2.

Anyway, I would regard it as not positive if a2MC fell into the hands of mainstream dairy giants whose fear is that global consumers will be turned off cows milk as the risks of A1 become better known. Governments also are leery about this. What will they all do then?

see weed

01-07-2015, 10:11 PM

Thats pretty well much what I have been saying too snapiti.could not agree more.
i think the Chinese relationship you are talking about NT is more of a gov't issue rather than a business one. Business will do what is in the interests of business first and foremost. Where there is profit there will be business. A lot of Chinese USA business relationships exist already.
ideal situation would be a 51% majority Dean's JD, freedom and continuation of NZ ownership.

It won't be in NZ ownership at this rate. Kiwis are good at selling the family silver.

Harrie

01-07-2015, 10:32 PM

It won't be in NZ ownership at this rate. Kiwis are good at selling the family silver.
Sorry, what I meant was that it would be an ideal situation not a probable one given that whoever the "group" will be, are after all the shares!

Harrie

01-07-2015, 10:41 PM

Sorry to hear about your health issue NT. For the reasons you give is the reason why it would be ideal for at least 49% of shares to be retained by kiwi investors to share in the growth of the a2 message. Freedom is a believer in the a2 message but not sure that deans is. Hopefully the group therefore would not bury the message.

NT001

01-07-2015, 11:08 PM

...it would be ideal for at least 49% of shares to be retained by kiwi investors to share in the growth of the a2 message. Freedom is a believer in the a2 message but not sure that deans is.

In the circumstances I agree the setup you mention would be better than most. I believe Deans accept the benefits of A2 and could be a good partner. I recall there were positive contacts between A2 Corporation and Deans at the time of A2C's first foray into the US around 2007-08.

Harrie

01-07-2015, 11:24 PM

In the circumstances I agree the setup you mention would be better than most. I believe Deans accept the benefits of A2 and could be a good partner. I recall there were positive contacts between A2 Corporation and Deans at the time of A2C's first foray into the US around 2007-08.

Surprising then that Dean's has not made a concerted effort to continue with a2 milk conversion?
someone had suggested that deans markets around 99% of its milk with a1 protein.
is that able to be confirmed? Why now all of a sudden would Dean's want to be a A2 advocate?

Joshuatree

01-07-2015, 11:24 PM

Anyone know what % of the NZ market A2 has; i suspect a fraction of the re 9% mkt share in AUS(despite seaweeds efforts:). Why is this?.

NT001

02-07-2015, 12:08 AM

Harrie, Deans are probably like Fonterra, they just mix it all up, so virtually all their milk has some A1 in it. But they seem to take pride in being a health-conscious outfit, and market some healthy products alongside their mainstream milk.

JT, I think I've heard a figure of a mere 3,000 litres a day of A2 milk being produced by Fresha Valley up in the far north. It may have been Fresha's boss who told me this a year or so ago. He did tell me they had just 300 a2 cows, so it sounds about right. Wouldn't surprise me if they're having to increase the herd, because A2 seems to be selling quite well now in Countdown stores and he said he would guarantee to meet all orders received (he's probably contractually obliged to). But he doesn't seem to go out of his way to sign up new outlets, and at that time he was actually disposing of some surplus A2 by mixing it into the standard milk he supplies to Auckland outlets.

Why so little? My own guess is that it's really just a sideline for Fresha Valley, which has a monopoly licence in NZ and therefore no competition until the licence expires in 2017. Dumb commercial deals were entered into by A2C back in the early days. The Fresha boss does believe in A2, but doesn't want to irritate Fonterra by building it up too much. a2MC plans to address the NZ market in 2017.

see weed

02-07-2015, 09:06 AM

Anyone know what % of the NZ market A2 has; i suspect a fraction of the re 9% mkt share in AUS(despite seaweeds efforts:). Why is this?.

I think it is advertised on tv over there. They will probably do the same in the US. They don't have to worry about Fonterra and could double their sales fast.

NT001

02-07-2015, 11:12 AM

baller18

02-07-2015, 11:21 AM

Hopefully A2 milk is like kobe wagyu huh

Harrie

02-07-2015, 11:49 AM

http://seekingalpha.com/article/3297105-why-you-should-stay-away-from-dean-foods

Here's a very interesting and quite detailed analysis of the problems currently facing Dean Foods. I don't know anything about this source, but the article is full of useful info, making clear Deans is not really in much of a position to be investing in outside deals at present but seems to be on the improve following a bad period. Its interest in unconventional dairy products targeting the health-conscious is highlighted, with a reference to A2 Milk. Interested to hear what others with a better understanding of balance sheets think.

http://seekingalpha.com/article/3297105-why-you-should-stay-away-from-dean-foods

"Welcome back to milk" seems like quite a good message then.
Plenty of room to grow the natural milk market given the nutritional value c/f plant based product like orange juices and other lolly water drinks.
Hugh opportunity.
Deans appears to be another synlait type operation. Its a processor, and maybe wanting to get into processing a2 milk and sharing in a2 profits.

see weed

02-07-2015, 01:12 PM

What do the TA people think? Is it time to buy in yet?

zymwh

02-07-2015, 02:10 PM

Sacred cows: The secret to A2 Milk’s success
2 July 2015

https://www.marketingmag.com.au/hubs-c/sacred-cows-secret-a2-milks-success/

Ginger_steps_

02-07-2015, 02:23 PM

79c on offer now. Will we breach 80c today?? It seems the mention of Chinese investors (who buy everything) has sparked confidence in a takeover?

Harrie

02-07-2015, 02:32 PM

Sacred cows: The secret to A2 Milk’s success
2 July 2015

https://www.marketingmag.com.au/hubs-c/sacred-cows-secret-a2-milks-success/

All griss to the mill. That is a pretty positive overview as to where A2 has been and where it is headed.
Anecdotal evidence using modern forms of communication is just the thing to get the message out.
Hopefully Mr JD.com will absorb this and up the anti!

baller18

02-07-2015, 02:39 PM

sacred cows, now need to market them as the wagyu standard of milk! lol

Xerof

02-07-2015, 02:41 PM

What do the TA people think? Is it time to buy in yet?

I like it when someone asks a TA question - I can't be accused of ramming chicken bones down peoples throats. As you know my TA calls are a bit rough around the edges, so this is my opinion only

7450

Yes, I'm going to mention the gap(s) :p

you will note the CONSOLIDATION between 48c and 58c area over the past few months, followed by the large gap out of that zone, on nice volume.

UNLIKE the 'common' gap, this is a BREAKAWAY gap, very bullish, as it represents breaking of an established range, and the START OF A NEW TREND

You will also note the partial retracement, as doubters took quick profits. This was roughly a 62% retracement - excellent harmonics (and 69c was the perfect no risk buy level) - and since then its been nicely trending.

Plans are good when they go to plan, so accept it's in a new uptrend at this stage.

see weed

02-07-2015, 03:25 PM

exspect a SH notice over the next few days as some one is accumalating rapidly.

You can say that again, I did an experiment this afternoon and put 25,000 on to sell at 78c , by the time I went back to the depth chart , they had gone.

silverblizzard888

02-07-2015, 03:34 PM

Usually its normal for a retrace a cent or two from the morning high, but the momentum hasn't stopped today and steadily goes up. Someone is definitely accumulating regardless if we see a SH notice.

Fisherking

02-07-2015, 05:21 PM

Anyone know what % of the NZ market A2 has; i suspect a fraction of the re 9% mkt share in AUS(despite seaweeds efforts:). Why is this?.

Fonterra have the market sewn up

Joshuatree

02-07-2015, 07:21 PM

JT, I think I've heard a figure of a mere 3,000 litres a day of A2 milk being produced by Fresha Valley up in the far north. It may have been Fresha's boss who told me this a year or so ago. He did tell me they had just 300 a2 cows, so it sounds about right. Wouldn't surprise me if they're having to increase the herd, because A2 seems to be selling quite well now in Countdown stores and he said he would guarantee to meet all orders received (he's probably contractually obliged to). But he doesn't seem to go out of his way to sign up new outlets, and at that time he was actually disposing of some surplus A2 by mixing it into the standard milk he supplies to Auckland outlets.

Why so little? My own guess is that it's really just a sideline for Fresha Valley, which has a monopoly licence in NZ and therefore no competition until the licence expires in 2017. Dumb commercial deals were entered into by A2C back in the early days. The Fresha boss does believe in A2, but doesn't want to irritate Fonterra by building it up too much. a2MC plans to address the NZ market in 2017.[/QUOTE]

Thanks NT; that explains it. Hope they learn from that and come on strong in 2017. Its not a good look to see seemingly little acceptance here in NZ for A2. Fonterra doesn't have it sewn up as someone else suggested.

My tongue in cheek post about A2 being good for cats; well hey maybe it actually IS ; think of the mkt for millions of moggys!

Funny you assumed I wasn't living in NZ seaweed and funny i assumed you were.. I may put up a poll about who lives where. country wise

see weed

02-07-2015, 09:42 PM

Every one happy with their holding,mine are up 37.8% so far. ASB portfolio up 25.6% . When is it going to stop? Not use to this sort of thing. Joshuatree, I live in NZ and so do you:).

NT001

02-07-2015, 09:54 PM

exspect a SH notice over the next few days as some one is accumalating rapidly.

There aren't many shareholders who are close to becoming substantial shareholders (5%) or who are over 5% and have to declare 1% (6.6m shares) movements. Who are you picking?

Kirk

03-07-2015, 09:19 AM

http://m.theaustralian.com.au/business/mergers-acquisitions/freedom-to-find-an-ally-in-deans/story-fn91vdzj-1227426099772

NZSilver

03-07-2015, 09:46 AM

Can you please post kirk???

NZSilver

03-07-2015, 09:50 AM

Of interest https://www.marketingmag.com.au/hubs-c/sacred-cows-secret-a2-milks-success/

NT001

03-07-2015, 09:55 AM

http://m.theaustralian.com.au/business/mergers-acquisitions/freedom-to-find-an-ally-in-deans/story-fn91vdzj-1227426099772

I'mnot a subscriber tothe Australian, so can't access the story, but here's a statement issued by Deans that I assume the report is based on. It puts a different perspective on the analysis posted yesterday that questioned Dean Foods' ability to fund a major investment acquisition.

http://www.marketwatch.com/story/dean-foods-completes-refinancing-of-1-billion-in-revolving-credit-facilities-2015-03-26

Kirk

03-07-2015, 10:06 AM

http://m.theaustralian.com.au/business/mergers-acquisitions/freedom-to-find-an-ally-in-deans/story-fn91vdzj-1227426099772

The US-listed Dean Foods looks set to provide a strong financial ally for Freedom Foods in its play for a2 Milk after completing a *refinancing that delivered it $US1 billion ($1.3bn) in total revolving debt *facilities.
Dean Foods has entered into a new $US450 million senior secured revolving credit facility that includes a provision to raise the amount of the revolving *facility by up to $US200m.
The company has also amended and restated its existing $US550m receivables securitisation facility to extend the maturity by another three years.
At the time of the refinancing earlier this year Dean Foods chief executive Gregg Tanner said the company had the “capital structure that is more appropriate for a company of our size and industry position and that gives us the flexibility to fund our operational and strategic objectives to generate long-term shareholder value”.
Chief financial officer Chris Bellairs also noted that as fast Dean Foods “levered up in 2014, we’re beginning to lever down in 2015’’.
He added that for covenant purposes, the company’s cash on hand exceeded its senior secured indebtedness and its senior secured net leverage ratio was zero times.
Dean Foods and Freedom made an informal approach to buy a2 late last month after Freedom’s key backer, the billionaire Perich family, indicated it was concerned about a2’s expansion strategy.
The a2 board was scheduled to meet overnight in London, but nothing concrete was expected to emerge regarding the Freedom and Dean Foods approach at this stage.
There have been questions about the Perich family’s willingness to finance a full takeover bid for a2. Family patriarch Tony Perich is believed to have said the company has $100m in cash to put towards a tilt at the milk company. The Perich family owns 56 per cent of Freedom, while Freedom itself has 18.6 per cent of a2. The Perich family also directly owns a 1.3 per cent stake in a2. Freedom is also talking to its Chinese partner, New Hope Dairy, about helping finance a bid.
Seeking Alpha, a US-based crowd-sourced content service for financial markets, this week carried a report questioning the strategy of Dean Foods after its shares fell 15 per cent this year.
It claimed falling milk consumption and fluctuating prices would act against the US firm and noted it was also facing stiff competition in the plant-based non-dairy beverages industry.
It claimed that while the approach to a2 was a “step in the right direction’’, it added that “the space is extremely competitive and Dean Foods will find it difficult to win market share from peers due to its late entry’’ into the dairy alternative beverage market, which is projected to grow to $US14bn in sales by 2018.
Dean Foods last month moved to consolidate its more than 30 milk brands under one national banner known as DairyPure. Advertising for Dean’s DairyPure brand has *focused on a “fresh from your local dairy’’ image, stressing it has no antibiotics and comes from cows free of growth hormones. Dean has 36 per cent of the US milk market and is the nation’s largest milk processor by sales, which have declined.

NT001

03-07-2015, 10:41 AM

Thanks Kirk. Interesting new stuff in there.

Nasi Goreng

03-07-2015, 11:25 AM

You can understand why Deans would want this go through particularly with declining volumes. A positive A2 message and a welcome back to milk campaign could do wonders over the next few years for them plus licensing opportunities for other continents.

On the other hand, Fonterra would be fools to let this go through. I wonder if they could go for a mega merger and buy Deans plus ATM or a significant stake in both. If global supply is increasing, A2 could be the perfect way to differentiate themselves against the rest of the pack.

Either way, Fonterra needs to do something to substantially turn around their business. Cutting costs and headcount can only do so much.

baller18

03-07-2015, 11:39 AM

How can fonterra take a large stake in both? Their market cap is 500mil

stoploss

03-07-2015, 11:46 AM

How can fonterra take a large stake in both? Their market cap is 500mil

The Co-Op is worth much more ........

Nasi Goreng

03-07-2015, 11:51 AM

I hear borrowing rates are quite low at the moment.

Nasi Goreng

03-07-2015, 12:00 PM

I can't imagine any of the shareholders are that happy at the moment. Dairy prices are dropping at about twice the speed of the NZD and Fonterra have played things really badly.

Imagine 5 years from now increased demand for A2 and NZ not even being in the game.

RGR367

03-07-2015, 01:29 PM

..................
Imagine 5 years from now increased demand for A2 and NZ not even being in the game.

Do you think that those who buys at the Fonterra auction for dry milk powder really care about whether its a combination of A1 and A2 protein? I don't think so. It may diminish somewhat Fonterra's clout but there will always be a market for milk as it is now.

Leftfield

03-07-2015, 01:58 PM

Do you think that those who buys at the Fonterra auction for dry milk powder really care about whether its a combination of A1 and A2 protein? I don't think so. It may diminish somewhat Fonterra's clout but there will always be a market for milk as it is now.

Maybe not now…. but in the future? The A1 v A2 debate is a bit like Tobacco Inc's denial of problems for many years. Deans & Freedom are smart cookies. Shame for NZ to lose this one as our dairy industry needs to hedge its bets, rather than drowning in denial.

Harrie

03-07-2015, 02:25 PM

There is some interesting comments made in the article above posted by Kirk

The first is that the Perich family, indicated itwas concerned about a2’s expansion strategy.
Why is that? They could not have been concerned with stumping up with cash in a CR because the article did say that FF had $100 mil in cash to use for a buyout of a2mc?

Deans has just secured a $1 bil lending facility. The CEO says that they are deleveraging and apparently they have enough cash to cover secured debt which has probably come from the securitization of their receivables, so now they are wanting to leverage up again to buy out a2mc?
In a way they are like Fonterra. The are heading in the right direction with marketing nutritional product to compete with the dairy alternative beverage market but with a2 how is that going to sit with their "Dairy pure product" which contains the A1 protein?
Will be an interesting marketing exercise.

NT001

03-07-2015, 02:34 PM

Yes, Fonterra and its mates in the Food Safety Authority (a government agency) dug themselves into a hole several years ago by rubbishing A2's claims, and will be somewhat nervous about its recent success commercially and scientifically, but it's hard to see how they can dig themselves out.

They must be a bit blindsided by a2MC's recent offshore success. Their hope obviously was that the company would fail to take off from its pathetic NZ base, and would never get much scientific credibiity. Wrong on both counts. My suspicion is that Fonterra would now like to reach a compromise with a2MC and take over Fresha's licence to produce A2 milk for the NZ market. Its farmers must be looking with envy at the premiums being earned for A2 milk. But Fonterra and the FSA would both have to eat a lot of their past words and Synlait would almost certainly raise objections. I don't see why a2MC would agree either, now that it's on the verge of major offshore expansion despite all the past knocking.

Harrie

03-07-2015, 03:21 PM

Well said snapiti, I'm a great advocate of seeing arrogance eat humble pie, still, I suspect that until its blindingly obvious that A1 protein has known health issues, they will continue to deny it.

Just thinking that Deans may be interested in using FF networks in China to distribute USA product. A FF, new hope, JD com, Deans partnership holding all the shares in a2mc would certainly help them given that Deans product could be channelled through Australia under the FTA

NT001

03-07-2015, 04:05 PM

highly unlikely to see 4 different partners take control of the company....too many chiefs and working parts to make that work for all of them.

Totally agree.

Harrie

03-07-2015, 04:11 PM

yeah probably right, but maybe a FF Deans combo

sb9

03-07-2015, 04:14 PM

Yeah, two is company (partnership), three is crowd and four is disastrous....

ziggy415

03-07-2015, 04:29 PM

yeah probably right, but maybe a FF Deans combo
i still think freedom,s block of shares are on the market....I think they want out

QFD Sage

03-07-2015, 04:45 PM

I actually think that it will be a 4 party consortia, each party taking responsibility for their own territory/market. Freedom in Aus, Dean in U.S., JD in China, and who in the UK....Wiseman maybe? That makes the transaction affordable too. Roll on an announcement...if no bid is forthcoming I would like ATM to focus on the business and get the Cap Raise underway if that will accelerate the strategy.

Harrie

03-07-2015, 04:47 PM

i still think freedom,s block of shares are on the market....I think they want out

Yes I'm starting to think that myself. When they said they were not happy with the a2mc expansion plan what they were really saying is that they don't want to front up with the cash in a CR and would rather spend it on their own expansion program. Better to get a 100% bang for a buck investing in FF than 20c odd for the same dollar investing in a2mc. Deans offers an opportunity to FF to offload a2 shares, and deans through a2mc distribute a2 milk into China, the USA UK, and Deans product into China via a2mc. Why else would they be raising NZ$1.3bil in the USA. Paying NZ$1.00 per share only uses around 50% of that facility.

Nasi Goreng

03-07-2015, 04:47 PM

ziggy415

03-07-2015, 04:57 PM

Yes I'm starting to think that myself. When they said they were not happy with the a2mc expansion plan what they were really saying is that they don't want to front up with the cash in a CR and would rather spend it on their own expansion program. Better to get a 100% bang for a buck investing in FF than 20c odd for the same dollar investing in a2mc. Deans offers an opportunity to FF to offload a2 shares, and deans through a2mc distribute a2 milk into China, the USA UK, and Deans product into China via a2mc. Why else would they be raising NZ$1.3bil in the USA. Paying NZ$1.00 per share only uses around 50% of that facility.
Perich topping up to 20% via its holding of freedom seems a bit odd tho

Harrie

03-07-2015, 04:59 PM

Perich topping up to 20% via its holding of freedom seems a bit odd tho

Well not really when they can flog them off at a higher price to Deans.

NT001

03-07-2015, 07:11 PM

... Deans offers an opportunity to FF to offload a2 shares, and deans through a2mc distribute a2 milk into China, the USA UK, and Deans product into China via a2mc....

At this point Deans has little international experience, and is preoccupied with re-branding its product range for the US market rather than expanding offshore. I can see why Deans could be interested in taking over a2MC or taking a major stake in it in order to expand its range of products outside the dairying mainstream and with appeal to health-conscious US consumers. But actually it could do this via a deal with a2MC without taking it over.

a2MC's present strategy is to remain a small-staffed company that sticks solely to its own knitting. As its marketing chief Susan Massasso made clear in that interview in Marketing magazine posted on this thread yesterday, its mantra is "do one thing and do it well", for which it needs fewer than 40 employees and a marketing team of fewer than 10.

So it wouldn't be at all keen on marketing non-A2 milk into China to help out a US company. And even if Deans takes it over, it would strain marketing credibility for a company called a2 if it started flogging off milk other than A2 in China, UK or anywhere else. Maybe Fonterra would be happy to do that for them.

Harrie, you also ask (post 4437) why Perich would be upset at having to put money into a cap raise and why he doesn't like a2MC's strategy. FWIW, my guess is that he has his eyes fixed on China, not the US. Just recently he signed a 50-year alliance (which also includes FF) with Guangzhou-based Shenzhen JiaLiLe Food Company to supply dairy products for Chinese kids. And last year he signed a deal with New Hope (Chengdu) under which he and FF have to invest heavily in large-scale new joint venture dairy farms in Victoria to supply the Chinese partner. That's all going to tie up a lot of money and energy, and I think that's why he doesn't like Babidge focussing on the US and wanting more capital to speed things up there.

Xerof

03-07-2015, 07:22 PM

NT, they would be after the IP, wouldn't they?

Nasi Goreng

03-07-2015, 07:33 PM

NT, doesn't it depend on the way the products are marketed for whoever owns it.

If they don't get into all the unproven stuff, they can market it as the way A2 do now which is around easier digestion.

Some cars digest 98 better than 91. I know there is a whole load of science behind A2 but is it not ok to sell both?

NT001

03-07-2015, 10:16 PM

NT, doesn't it depend on the way the products are marketed for whoever owns it? If they don't get into all the unproven stuff, they can market it as the way A2 do now which is around easier digestion.

They can do that right now but other issues are coming up, such as autism, schizophrenia and cot death, for which the scientific evidence is mounting to the point that it will become "proven". What you call the "unproven stuff" is not going to stay unproven, and it will then become an interesting marketing exercise for a company that sells A1 milk, having to say: "Well we know the A1 milk we're selling you increases the chances of autism and schizophrenia in your family, but hey, we can also sell you A2 milk at twice the price that doesn't have these nasty risks."

Doubters find it difficult to believed that in decades ahead, drinking A1 milk is likely to be seen as a bit like smoking. ("Oh yes we all used to do it because no one could absolutely prove the risk, but now we know better".) And the purveyors of A1 will have problems. Read Woodford's book. It's not just autism and schizophrenia, it's diabetes, heart disease and even cancer - anything that the body needs an unimpaired immune system to ward off.

NT, they would be after the IP, wouldn't they?

Well yes, largely, but why pay hundreds of millions for IP you don't really understand the implications of? That's what I'm worried may happen. Are the Chinese for instance just going to keep on producing cheap and nasty A1 milk for the masses and importing A2 by airfreight at huge prices for the wealthy, well-informed and health-conscious?

The purpose of the IP is not just to make money but to enable the establishment of A2 herds. But the Australian experience has shown farmers don't need to own the company to do that. The Chinese could start doing that right now by simply breeding from tested A2 bulls and testing their cows, gradually culling the non-pure-A2s.

Harrie

04-07-2015, 12:30 AM

[QUOTE=NT001;579450]

So it wouldn't be at all keen on marketing non-A2 milk into China to help out a US company. And even if Deans takes it over, it would strain marketing credibility for a company called a2 if it started flogging off milk other than A2 in China, UK or anywhere else. Maybe Fonterra would be happy to do that for them.

I didn't mean that Deans would use a2mc to distribute their milk into china but rather the myriad of other product they produce.
Having said that I do accept your point that a2mc's marketing manager wants to concentrate on one product and do that well, so using a2mc to help them with distributing other product of Deans into China is not really a goer.
So the big question remains, what do Deans intend to do with a2mc by getting involved with FF?

NT001

04-07-2015, 02:09 PM

Freedom Foods, as a listed ASX company, has announced the details of a new alliance between itself, Perich, the Moxey farming family and New Hope (China).

http://www.asx.com.au/asxpdf/20150703/pdf/42zlz0r3jv5lt8.pdf

This deal has actually been in the works and public knowledge for some months, as it was announced in April that the Perich and Moxey farming giants were creating a joint venture with New Hope. The new element now is that Freedom is also included, which was not the case originally.

The report in The Australian on this deal ties it in with the discussions about a takeover of a2MC, but there is not really any direct connection, and A2 is not mentioned in Freedom's announcement. Nevertheless, in Perich's mind (and the Perich family which controls Freedom is driving this whole merger) there will no doubt be plans to extend its tentacles to a2MC.

The story in The Australian makes clear the development of "greenfield" dairy farms is going to chew up a lot of effort and capital, by both Perich and Freedom. I think this supports my view that (a) Perich would rather see a2MC focussing on China than on the US, and (b) Freedom won't be wanting to lay out cash for much more of a2MC than its current 19% holding. Deans is not part of this little empire, but it'll be interesting to see if it does become involved.

The story in the Australian may be paywalled but I was able to pick it up on the open net. The guts of it follows:

Freedom Foods and the Perich family have formally cemented a new alliance with China’s New Hope Dairy Group as they continue negotiations regarding a potential purchase of a2 Milk. Under the terms of the alliance, the billionaire Perich family’s Leppington Pastoral Company will partner with New Hope, Freedom and Moxey Farms, one of Australia’s largest single-site dairy operations, in a consortium called Australian Fresh Milk Holdings.
Freedom revealed yesterday that upon completion, it would hold a strategic 10 per cent equity position in AFMH, with the balance held by Leppington Pastoral, Moxey and New Hope.
Freedom’s equity contribution will be about $7 million and AFMH will maintain a relatively conservative gearing structure. It is expected to inject around $80m into Moxey and other greenfield dairy sites.
Both Freedom Foods and New Hope Dairy will have priority access to any increases in milk production at Moxey Farm or greenfield sites acquired by the venture.
Moxey is a major supplier of milk to a2, the board of which met on Thursday night in London, but there was nothing to report on negotiations with Freedom and its bid partner, the US listed Dean Foods.

Harrie

04-07-2015, 04:46 PM

Opens up a whole lot of possibilities wrt a2mc.
FF wants to concentrate on China, and increasing the development of more supply, which will suck up a fair bit of capital. Looks like Dean's alone could be doing the acquiring of a2mc and they have plenty of capacity now to do it with substantial funding lines in place. I think that Dean's will see increasing profitability in a2mc in both the Asian and USA market so happy to go along for the ride.
Here is an issue though:
what is to stop freedom, if exiting from a2mc shares marketing something like " Moxley a1 free milk" in China and knocking a2 milk out of the picture. I am presuming that supply agreements between Moxley and a2mc for a2 milk are reviewable?

NT001

04-07-2015, 06:37 PM

... What is to stop Freedom ... marketing something like "Moxey a1-free milk" in China and knocking a2 milk out of the picture.?

They could possibly try, although I doubt if they would resort to such tactics. One problem with launching an "a1-free" label is you have to explain to consumers what a1 is and what's wrong with it. Not easy, and it puts you at odds with marketers of milk containing a1 (most milk), which might well include some of FF's and Perich's and New Hope's own products. And in some jurisdictions it's illegal or very dicey to denigrate the opposition. That's a constraint a2MC itself faces and will face increasingly as the science becomes clearer.

Any rival wanting to compete with a2 milk would probably do better by inventing a new brand that steers clear of the A1/A2 debate up-front and just claims to be more digestible and flavoursome than other milks. I'm not an IP expert, but my guess is that in fine print it could probably then explain that it is from A2 cows.

NT001

04-07-2015, 09:23 PM

Am I the only one awake and not watching the footy?

Anyway here we go again. This item from the Washington Post isn't about ATM but provides an excellent overview of where the US dairy industry is at, and includes references to the NZ situation, California and Deans.

http://www.stuff.co.nz/business/farming/dairy/69962286/holy-cow-milk-supplies-overwhelm-us-dairies

NZSilver

05-07-2015, 05:21 PM

Nice little Summary

https://keithwoodford.wordpress.com/2015/07/05/is-a2-milk-about-to-leap-forward/

NT001

05-07-2015, 07:33 PM

Nice little Summary

https://keithwoodford.wordpress.com/2015/07/05/is-a2-milk-about-to-leap-forward/

Yes, an interesting overview. The paragraph near the end stating that Fonterra doesn't need to buy ATM because it already owns 50% of one of the key patents (with A2 owning the other half) seems to me somewhat beside the point.

There are two patents relating to methods of identifying the A1-A2 status of cows (and bulls). By far the most practical and commercially valuable patent covers the method that involves the DNA-testing of a few hairs from a cow's tail, and that patent belongs fully to a2MC. The other one involves testing the milk produced by each cow, and the patent for that is jointly held by a2MC and Fonterra. Some years ago Fonterra unsuccessfully sued for shared ownership of the tail-hair test patent as well, but its claim was thrown out.

Fonterra (or more precisely the former Dairy Research Institute) played a key role in the early A1-A2 research and acquired a 50% stake in the cows-milk test patent based on the assertion that A1 carries a risk of triggering type 2 diabetes. Yet it has not shown any interest in exploiting that patent, and in fact has tried, rather unconvincingly, to backtrack from the health claim underlying it. Moreover, that patent has much less utility and value than the hair-tail test patent belonging to a2MC.

Harrie

05-07-2015, 09:41 PM

If the bid fails, then a complicating factor is that ATM relies on the Moxey and Perich dairy herds for much of its Australian supply of milk. It is unknown as to the details of their current supply contracts with ATM, and whether the new AFMH entity will be bound by such contracts. Without this milk supply, the Australian arm of ATM is in big trouble

Pretty well much what I said in my last post. Given that Babidge and the Perich boys have reportedly had some differences between them could result in a2mc being cut out of the picture after Freedom flogs off its a2mc shares to Deans and goes and remarkets a2 milk as something like "moxey a1 free milk" (obviously can't market the milk under the a2 brand)
The supplier of a2 milk holds all the cards. Not an impossible feat to rebrand and educate the public but a big call.

Not saying this will happen but it is a risk IMO, especially if the Perich boys fall out with a2mc, or they think that they can go it alone and make profits that would normally be associated with a2 especially in China and SE Asia. The patents for a2 testing could be a factor that could stop it but I'm sure there are other ways of testing that could be performed without breaching patent rights.

Here is an issue though:
what is to stop freedom, if exiting from a2mc shares marketing something like " Moxley a1 free milk" in China and knocking a2 milk out of the picture. I am presuming that supply agreements between Moxley and a2mc for a2 milk are reviewable?

NT001

06-07-2015, 12:07 AM

I agree the situation is potentially fraught, Harrie. But there's so much we simply don't know, and with at least six actors in the mix (ATM, FF, Perich-Moxey, New Hope, Liu and Deans) the permutations are almost endless. This speculation is fascinating but very likely futile as the situation changes almost daily. There may well be other actors waiting to jump in, whom we haven't even heard about as yet.

I think it very unlikely the takeover bid will fall over - it's just a matter of whose takeover. In one potential scenario, a2MC could end up being absorbed into AFMH, a creature of Perich, in which case the terms of present supply contracts would be immaterial. My guess is that the Perich family would not let Freedom flog off its a2MC stake to Deans - it would want control of a2MC's IP and would prefer to keep the rights to the a2 label. It could do this at relatively little cost if New Hope and possibly Deans shared the tab for a joint takeover bid.

After all, the consortium would only need 51% and it's already got 20% (that we know of). Even at NZ$1 a share, another 31% would only cost around NZ$200m. Incidentally, Freedom's stake in a2MC is currently worth around $85m Australian but is valued at only A$10m on Freedom's books, due to a somewhat bizarrely explained "book keeping" change implemented last year. Not sure how that might affect the equation.

Another interesting aspect to all this is that Perich is a part owner of the a2MC processing plant at Smeaton Grange in Sydney. Not sure who calls the shots there.

But again, this is all speculation, probably idle. And let's remember, Babidge and two of his top executives are all out of the Freedom stable, and for all we know they could be having reasonably amicable talks right now.

Harrie

06-07-2015, 12:22 AM

Hope you are right NT because if a takeover is definitely on the cards, the upside looks pretty damm attractive.

sb9

06-07-2015, 04:17 PM

Another 4Ml transacted, looks like a transfer. What does your calculations say see weed...how many we're upto now?

see weed

06-07-2015, 04:33 PM

Another 4Ml transacted, looks like a transfer. What does your calculations say see weed...how many we're upto now?

Milford just sold 14.8 mill a couple days ago.

NZSilver

06-07-2015, 04:35 PM

Yeh I thought they would have gone the other way and tipped over 10%. Interesting.

see weed

06-07-2015, 04:44 PM

115,722,000 + shares gone in last 25 days. But I bought some more this avo.;)

NT001

06-07-2015, 04:56 PM

Milford just sold 14.8 mill a couple days ago.

Actually they began selling the 14.8m shares earlier in June, before the price shot up with the takeover talk. They still have 50.8m shares (7.7%).

see weed

06-07-2015, 05:12 PM

Actually they began selling the 14.8m shares earlier in June, before the price shot up with the takeover talk. They still have 50.8m shares (7.7%).

Sorry:). I wonder who, are they selling to?

NT001

06-07-2015, 05:34 PM

Harrie

06-07-2015, 05:39 PM

I would think the hold up at the talks at the mo is because FF/Deans are talking to the shareholders like Milford ACC and NZSF about what sort of price they would be happy to sell at.

winner69

06-07-2015, 06:52 PM

Of the 14.8m shares sold by Milford, 8.6m was listed as a "transfer" rather than a sale, and took place on Friday at 75c. Not sure exactly what "transfer" means in this context. A negotiated off-market deal? A transfer to the ASX register?

Prob the shares they had as part of the Mercer mandate and 'transferred' to whose doing the Mercer stuff now

Tied in with carry on
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11476583

blackcap

06-07-2015, 09:55 PM

thanks winner.......always good to look past the headlines of a large SH notice

Yeah got heaps of SSH in my inbox today all from Milford reducing their holdings... ouch.

sb9

07-07-2015, 01:58 PM

Seems as if things are in a bit of holding pattern atm...

Kirk

07-07-2015, 02:28 PM

isnt the court case against ABC due to be heard today?

see weed

07-07-2015, 04:36 PM

Lot of sellers at 74c. Must be sick of waiting for announcement. Is anyone on here still buying at these levels?

Nasi Goreng

08-07-2015, 09:47 AM

see weed

08-07-2015, 10:38 AM

In the midst of all the chaos last night in US markets, Dean Foods were in the green when most other stocks were down at session lows. Made me search for news but there was none. They finished the day up 2.71%.

D F shareholders must be very happy with the a2 takeover. I know I would be if I was a DF holder. Owning a one off company that cannot be copied.

Nasi Goreng

08-07-2015, 11:07 AM

Has anyone here bought or considered buying DF?

Harrie

08-07-2015, 02:49 PM

Someone out there sucking in sellers at 0.74c?

mayday

08-07-2015, 03:21 PM

Someone out there sucking in sellers at 0.74c?

relax mate, you should watch share price no more than 3 times a day unless if you are intradayer. ATM has been doing well and the good story is likely to continue. Sit back and have a beer and wait for annual report due September :)

Harrie

08-07-2015, 04:59 PM

relax mate, you should watch share price no more than 3 times a day unless if you are intradayer. ATM has been doing well and the good story is likely to continue. Sit back and have a beer and wait for annual report due September :)

Totally relaxed mayday, Thanks for your confidence but have been there a long time.
Looks like a fund manager David Mair is a shareholder of, has been busy picking up a little 700k parcel of a2mc shares.
Good sign

blobbles

08-07-2015, 09:49 PM

Yep, I likey likey when insiders are buyey buyey! (what did I just write??)

airedale

09-07-2015, 09:45 AM

Hi Blobbles, Chenglish is the answer to your question.

Hawkeye

09-07-2015, 03:10 PM

Any update on the outside interest in these shares yet? Im thinning out my portfolio and these guys are on the chopping block

sb9

09-07-2015, 03:16 PM

FYI, new USA a2milk advert/promo

http://a2milk.com/try_a2_milk

Snoopy

09-07-2015, 03:18 PM

Freedom Foods and the Perich family have formally cemented a new alliance with China’s New Hope Dairy Group as they continue negotiations regarding a potential purchase of a2 Milk. Under the terms of the alliance, the billionaire Perich family’s Leppington Pastoral Company will partner with New Hope, Freedom and Moxey Farms, one of Australia’s largest single-site dairy operations, in a consortium called Australian Fresh Milk Holdings.
Freedom revealed yesterday that upon completion, it would hold a strategic 10 per cent equity position in AFMH, with the balance held by Leppington Pastoral, Moxey and New Hope.
Freedom’s equity contribution will be about $7 million and AFMH will maintain a relatively conservative gearing structure. It is expected to inject around $80m into Moxey and other greenfield dairy sites.
Both Freedom Foods and New Hope Dairy will have priority access to any increases in milk production at Moxey Farm or greenfield sites acquired by the venture.
Moxey is a major supplier of milk to a2, the board of which met on Thursday night in London, but there was nothing to report on negotiations with Freedom and its bid partner, the US listed Dean Foods.

This 'takeover' by the multi headed hydra: Leppington Pastoral Company (Perich Controlled) New Hope, Freedom (Perich substantial shareholder) and Moxy Farms looks like a lot of people airing their dissatisfaction, rather than a serious bid.

Of those four, I would say it is China's "New Hope" that has by far the largest financial muscle behind them. Yet when "New Hope" were roped into the Agria takeover of PGW, they famously arranged a kind of preference share arrangement where they would share in dividends from PGW in the future. IOW they were taking money out of the consortium, not putting money in. The question is do New Hope have the willingness to put money into ATM, or do they just want to own some Australian farmland? Given past behaviour, and the fact that the Chinese government are more concerned about propping up their own stock market bubble at the moment, I would say no new capital will be available from New Hope in teh immediate future. ATM reinvesting all profits means no possibility of cashflow for shareholders of ATM (present or future) for the forseeable future either.

Freedom ending up with 10% of the proposed "Australian Fresh Milk Holdings", will be a smaller proportion than the 20% they control of the independent ATM now. So no new money from that source. And priority for AFMH will be to put more money into existing and new dairy sites, not promote A2.

Deans in the USA not in a position to inject any meaningful capital either.

Some still hold out hope. But what I see is the multi headed hydra killing its own 'bid' (which doesn't yet exist anyway) stone dead to anyone who dares looks at the situation critically.

SNOOPY

sb9

09-07-2015, 05:19 PM

http://www.smh.com.au/business/jdcoms-richard-liu-buys-into-australias-biggest-milk-processor-murray-goulburn-20150709-gi8e62.html

NT001

09-07-2015, 05:50 PM

FYI, new USA a2milk advert/promo

http://a2milk.com/try_a2_milk

Thanks sb9, the a2 promotional video made for use in America is a cracker. Should work a treat on US TV, and also via the web. It's good to see a2MC is getting on with its real job while everyone else speculates about the takeover. My guess is that they'll make similar videos for the UK and Chinese markets. A good idea is worth repeating.

Leftfield

09-07-2015, 05:56 PM

FYI, new USA a2milk advert/promo

http://a2milk.com/try_a2_milk

Thanks - helpful informative post.

Joshuatree

09-07-2015, 06:06 PM

Good one sb9. Do we have another player?

"[/QUOTE]Sources told Fairfax Media last week that JD.com was also partnering with an international dairy company to buy a strategic stake in takeover target a2 Milk.
A JD.com spokesman declined to comment on the speculation.
However, Mr Liu said last week that the company was interested in investing in any company that could "ensure high-quality products for our consumers".

QFD Sage

09-07-2015, 06:25 PM

Great advert! Does anyone know if there is any new research in the pipeline? It would be timely to have some good news on the scientific front. Also, I'm keen to understand the Australian supply arrangements better - does anyone know how secure the supply is?

Harrie

09-07-2015, 09:59 PM

Most of the a2mc milk is sourced from leppington and Moxey farms. No one knows what the duration of a contractual supply from these farms is but it would need to be pretty tight.
It is an issue I had raised (post 4457)and was also raised interestingly enough a few days later in a blog written by Prof Woodfield in his latest blog. Those who control the supply hold the power. If FF wanted the a2 market to themselves then they could market "a1 free milk" and cut a2 out of the picture, however this is probably unlikely considering that they are trying to stitch a deal up with Deans. Unlikely that Deans would enter into any arrangement where a supply of a2 milk was not guaranteed in some form. This would also cost FF big time in terms of their effective 19% share of a2mc unless they are busy offloading on the open market under speculation that something positive for a2mc is happening. Probably illegal anyway.
The rumoured disagreement between the Perich Boys and Babidge is a bit of a concern, but that has never been verified.

Joshuatree

09-07-2015, 10:13 PM

http://www.jd.com/ Type in A2

NT001

09-07-2015, 11:29 PM

http://www.jd.com/ Type in A2

Thanks JT. Can you just give me a quick translation of all that, please? It looks to me like the same products are selling for all sorts of different prices. Am I right?

Joshuatree

09-07-2015, 11:32 PM

No i can't, me kee wee. there is translation button there to try but i didn't persevere.

NZSilver

10-07-2015, 10:56 AM

Whats going on, surely we should have had an update by now!

see weed

10-07-2015, 12:14 PM

Whats going on, surely we should have had an update by now!

Maybe it didn't work and they are trying to find a way of letting us down gently. I'm not too worried, me long term. Have already sold a few at great profit.:) But will keep the rest.

sb9

10-07-2015, 10:12 PM

Almost two weeks from the big announcement, nothing out yet. May be next week?

Xerof

10-07-2015, 10:37 PM

sb9

10-07-2015, 11:11 PM

Just noticed it finished up at 68c on Asx at close, some late surge.

NT001

11-07-2015, 01:27 AM

I did mention at the time that there is a 2 week 'notice and pause' rule for T/O's, so why anyone expected something before next week, I really don't know.

Notice and Pause means they give notice, but can't make the offer for a minimum of 2 weeks, nor can they 'legally' buy shares on-market - the 'pause' - but any other unrelated party can, at any price.

They must also make the T/O within 30 days, otherwise the process would have to start again. On the other hand, Babbage also said at the time that a formal T/O move was unlikely. ...

Thanks for that, Xerof. The clarification is most useful.

Actually, what Babidge said in his initial announcement was that "there is no certainty that the proposal will result in any transaction and the Board does not consider a takeover imminent". That makes it a bit difficult to predict whether or not a mere "expression of interest" is enough to start the clock ticking according to the Takeover Panel's timetable for a takeover bid.

The expression of interest was reported to the stock exchanges on June 22. If that is considered to be the start of a takeover process, we are now within the time period (14 to 30 days) when an offer has to be made. And the intending bidders can now be buying ATM/A2M shares.

The "offeror" (i.e. the bidding consortium") has to make its offer directly to A2M/ATM shareholders by the 19th of this month give or take a day or two.

Once a firm offer is made (if one is made), the board commissions an independent valuation of ATM's shares and an assessment of the offer.

I'm not clear as to exactly what happens if there is a counter-offer. Does this disrupt the timetable for the initial offer? A counter-bidder, would presumably be entitled to give notice and be granted due diligence (even though the Freedom-led group demanded "exclusivity"). And finally the board has to make a recommendation to shareholders. One assumes the Freedom-Perich rep on the board, Melvyn Miles, would not participate in that recommendation.

So the process may have quite a way to run yet. Please correct me if I am wrong in any of this, Xerof.

NZSilver

11-07-2015, 09:28 AM

Cheers xerof, I did not know that timetable with t/o. Nice to learn new info regarding investing.

Xerof

11-07-2015, 10:38 AM

NT001, time flies when you depart NZ shores for a holiday - yes you are correct - we are past the 14 day minimum. You raise a very good point about the wording of their 'expression of interest' - that may be insufficient to be construed as an intention to make a T/O. (perhaps robbo could comment?)

TBH, I haven't been paying too much attention to this since the first flurry, but I see no further concrete facts have surfaced (other than the gathering of clues by interested posters)

On that basis your last comment is valid IMO, and I would hold a personal view that the clock has not started ticking yet. If there were to be an offer, then any other competing offer would follow the same process in terms of N&P. Yes, any director with a conflict of interest would be excluded from the process.

ziggy415

11-07-2015, 03:29 PM

ziggy415

11-07-2015, 03:31 PM

been top weather since you left cobber

hope you doing plenty of A2 research....did seeweed give you some flyers to hand out

Xerof

11-07-2015, 03:37 PM

quite a chilly 21c here today - the locals are all moaning like hell. Just back from a 2.5 hr walk around the headland - 4 nudists on the isolated beach - all elderly males :t_down:

Got A2 in the fridge - ex Coles Noosa - no need for flyers - trampled in the rush to get near the chiller :D

Tsuba

11-07-2015, 05:05 PM

The Indian Express

http://indianexpress.com/article/lifestyle/health/diet-diary-desi-cow-milk-safest-variant/

Tsuba

12-07-2015, 05:50 PM

http://www.smh.com.au/business/the-hawk-chinese-journos-milk-woolies-for-all-they-can-20150711-gi9z4p.html

sb9

13-07-2015, 10:31 AM

Just noticed it finished up at 68c on Asx at close, some late surge.

Based on above, tht ATM would push higher on NZX to at least 75c on open (.68/.9025)....

NZSilver

13-07-2015, 06:49 PM

maybe tomorrow....

blobbles

13-07-2015, 10:23 PM

My worm has turned.... how about everyone elses? :-)

https://nz.finance.yahoo.com/q/ta?s=ATM.NZ&t=2y&l=on&z=l&q=l&p=m50%2Ce200&a=m26-12-9&c=

Harrie

14-07-2015, 10:30 AM

Not being a TA exponent, what does that mean Blobbles?
Which way has the worm moved?

Nasi Goreng

14-07-2015, 11:16 AM

Harrie

14-07-2015, 02:20 PM

Thanks Nasi, does beg the question though, is using pure TA to base buy/sell decisions realistic when ultimate decisions still require FA? Using that chart and your investment decision process (effectively ignoring it) does not produce anything decisive. There is the TA and then there is a "but". Is there always a "but" when a TA shows a "golden Cross" as you explain above, or is there always a possibility of a swing 20% either way when this occurs?

Nasi Goreng

14-07-2015, 02:58 PM

This situation is a bit unique given the potential takeover. There can be a 20% swing in any direction at any time on any stock regardless how good the chart looks.

TA is more about probability and gives you information about what the market has been thinking right up until now. e.g. is the price going up or is it going down? Is it about to hit resistance or has it just broken through resistance, are volumes increasing or decreasing etc..

I think it makes sense to use both FA and TA.

blobbles

14-07-2015, 09:28 PM

Blobbles chart shows that the share price is rising and the 50 day moving average has cut through the 200 day exponential moving average.

When the 50 day cuts through the 200 day to the upside, its known as the golden cross which is a bullish sign. Typically, anyone who is short would be getting pretty worried at this point and would be covering their position.

Its interesting that blobbles has used the exponential 200 day moving avg rather than 200 day simple moving avg if his intention was to show the golden cross. Either way, from a chart point of view, its looking good.

What you can't see in the chart is that there is a potential take over occurring or capital raising so this could easily swing 20% in either direction based on the news that comes out in the coming weeks. I wouldn't use the chart to guide my investment decision right now.

I like my 200 day EMA for ATM, seems to predict its movement a bit better looking historically.

The good thing about TA is that heaps of bots or people use it. If a golden cross happens, it can influence many different buyers which further reinforces the SP into upward/downward trends. It can help indicate game theory forces at play within the sharemarket. Of course any FA will always smash any TA, if tomorrow it is declared that the whole A2 thing is a huge hoax then it will smash the SP.

see weed

14-07-2015, 10:16 PM

I like my 200 day EMA for ATM, seems to predict its movement a bit better looking historically.

The good thing about TA is that heaps of bots or people use it. If a golden cross happens, it can influence many different buyers which further reinforces the SP into upward/downward trends. It can help indicate game theory forces at play within the sharemarket. Of course any FA will always smash any TA, if tomorrow it is declared that the whole A2 thing is a huge hoax then it will smash the SP.

Hope not, just bought whole lot more in last couple weeks. 122,635,000 + shares have traded in the last 31 trading days. Ok, I have sold some and have since started buying back in. There must be a lot of new shareholders in that 31 days. Buying in from .51c up to 58c through to 68c to 74c. Some of them might be longer term holders and will probably not want to sell at a loss because of any hoax news. But who knows, anything can happen. If it is hoax news, then they should not be hoaxing us around.

Joshuatree

14-07-2015, 11:35 PM

122,635,000 is a lot of shares to own seaweed. i see why your'e motivated to hang around in supermarkets and soft sell A2 and push 2 litre A2 bottles 3 abreast.;)

QFD Sage

15-07-2015, 08:38 AM

Freedom and Dean Foods have both had strong share performance in recent days. Could be a precursor to news...often is.

see weed

15-07-2015, 12:53 PM

Freedom and Dean Foods have both had strong share performance in recent days. Could be a precursor to news...often is.

Would that be good news or bad news?

sb9

15-07-2015, 01:45 PM

Zeez, what happened there did we miss something...up 2c in a jiffy :t_up:

QFD Sage

15-07-2015, 01:48 PM

I'd say good news seaweed. My cynical view is that there is often a positive run before announcements.

airedale

15-07-2015, 04:34 PM

Both NZX and ASX are up strongly today, so it may be a rising tide lifting all boats.

NZSilver

15-07-2015, 04:44 PM

I'd say good news seaweed. My cynical view is that there is often a positive run before announcements.

Yep, Id agree with that id say 80% of the time inc SP before ann means +ve news. (sirtex is one that come to mind in the 20%)

The more i read, the more i think we will get a T/O offer - im holding until then however have been tempted to take profits.

Unsure on price but i think it will be $1-$1.10 initially. - just my opinion could be wrong,

see weed

15-07-2015, 04:55 PM

Zeez, what happened there did we miss something...up 2c in a jiffy :t_up:

Sorry about that sb9, got a bit excited and bought some more at 73, 74,75 & 76c.:D

blobbles

15-07-2015, 07:08 PM

Looks like maybe my TA signal wasn't all hocus pocus after all?

QFD Sage

15-07-2015, 07:48 PM

Hope it lasts Blobbles! What would you expect from here on a TA basis?

see weed

15-07-2015, 08:19 PM

You'll be mounting your own takeover bid at this rate LOL

Would like to, but am about $1.8 b short. Do you think us sharetraders should get together and make a bid:)?

NT001

15-07-2015, 11:39 PM

..... Of course any FA will always smash any TA. If tomorrow it is declared that the whole A2 thing is a huge hoax then it will smash the SP.

Oh dear, here we go again. Of course it's always possible someone may declare "the whole A2 thing is a huge hoax", but not anyone with any scientific cred. Some so-called branding and advertising experts who know zilch about A2 sometimes cite the a2MC success in Australia as an example of clever promotion of a product that's really just the same as any other milk, but that's because they want everyone to believe that all sales success is due to branding and promotion rather than genuine product superiority and consumer satisfaction.

The fundamental science is settled. A2 milk is very distinctly different from A1 milk. They have different DNA, and A1 produces a medically hazardous peptide that is now indisputably linked not only with digestive discomfort in some consumers but with significant diseases including autism and schizophrenia. That's not disputed, although the precise details are still the subject of ongoing research.

As a matter of fact, a researcher from Northeastern University in Boston delivered a presentation at Oxford University in just the past few days reporting on new findings that A1 milk triggers oxidative stress, long known to be a key factor in both autism and schizophrenia. He said doctors therefore don't need to advise autism and schizophrenia patients to go dairy-free and protein-free - they just need to tell them to switch to A2.

There is some debate about suggestions published a decade or more ago based on very strong epidemiological evidence, that A1 milk is a significant factor (among others) in heart disease and diabetes. That also is the subject of ongoing research. But there has not been any scientifically credible suggestion in recent years that the "A2 thing" is a hoax.

So I think it's unfortunate when people on this thread raise the possibility that it's all a hoax, even just as a passing comment.

blobbles

16-07-2015, 07:33 AM

Oh dear, here we go again. Of course it's always possible someone may declare "the whole A2 thing is a huge hoax", but not anyone with any scientific cred. Some so-called branding and advertising experts who know zilch about A2 sometimes cite the a2MC success in Australia as an example of clever promotion of a product that's really just the same as any other milk, but that's because they want everyone to believe that all sales success is due to branding and promotion rather than genuine product superiority and consumer satisfaction.

The fundamental science is settled. A2 milk is very distinctly different from A1 milk. They have different DNA, and A1 produces a medically hazardous peptide that is now indisputably linked not only with digestive discomfort in some consumers but with significant diseases including autism and schizophrenia. That's not disputed, although the precise details are still the subject of ongoing research.

As a matter of fact, a researcher from Northeastern University in Boston delivered a presentation at Oxford University in just the past few days reporting on new findings that A1 milk triggers oxidative stress, long known to be a key factor in both autism and schizophrenia. He said doctors therefore don't need to advise autism and schizophrenia patients to go dairy-free and protein-free - they just need to tell them to switch to A2.

There is some debate about suggestions published a decade or more ago based on very strong epidemiological evidence, that A1 milk is a significant factor (among others) in heart disease and diabetes. That also is the subject of ongoing research. But there has not been any scientifically credible suggestion in recent years that the "A2 thing" is a hoax.

So I think it's unfortunate when people on this thread raise the possibility that it's all a hoax, even just as a passing comment.

Jeez, don't be so sensitive, I was just raising a case of some extreme FA event obviously having a huge effect on the SP which screws up all the TA in the world. I could have easily have said "Tomorrow Deans and co offer $3.50 per share". Touchy subject huh? It sounds like you are too emotionally invested TBH.

NZSilver

16-07-2015, 09:24 AM

$3.50 per share! I will show a few emotions if that's the case

waikare

16-07-2015, 09:34 AM

$3.50 per share! I will show a few emotions if that's the case

At $3.50 I'll be more than showing a few emotions, I'll be a happy chappy.

NT001

16-07-2015, 05:10 PM

... Touchy subject huh? It sounds like you are too emotionally invested TBH.

Not really, blobbles, but there are still some people out there who like to raise doubts about A2, and various people on this thread have from time to time raised the possibility one way or another that "the A2 thing" might be disproved. I wasn't suggesting that you believe that, but the thread is open to all, including people who don't know the score and might be interested in sizing up a2MC for investment but could be very put off by the thought that followers of ATM consider it a possibility worth mentioning. No offence intended. Cheers

QFD Sage

17-07-2015, 06:49 AM

Exchange rate movements continue to be favourable to ATM, quite meaningful movement in all key currencies in recent months.

sb9

17-07-2015, 10:12 AM

Does anyone here know the exact date of FY results announcement, I know its August, but don't know exact date.

Hawkeye

17-07-2015, 03:36 PM

So when can we expect an actual offer from someone? What is the in your own opinions "expiry" on the interest, meaning no offer is likely to come.

Jasemc

17-07-2015, 05:05 PM

So when can we expect an actual offer from someone? What is the in your own opinions "expiry" on the interest, meaning no offer is likely to come.
Me thinking if they doing due diligence then offer will come before results if the numbers are good. If numbers bad may wait and let sp drop. Just a thought?

NT001

17-07-2015, 05:13 PM

Hawkeye, it seems there is probably no deadline and it is not certain that an actual offer will materialise, although it seems likely - just not yet. If an "offeror" gives notice of an impending takeover bid, it is required to make its offer in writing to shareholders of the target company during the period 14 to 30 days after giving notice. If it doesn't do so in that window of time, there is no offer and the process lapses.

In this instance, Freedom Foods and Dean Foods indicated to the a2 Milk Company on or about 21-22 June an "expression of interest" in making a takeover bid for all shares in a2MC. But it appears this probably did not amount to giving formal notice of intention to launch takeover. The a2MC CEO, Geoff Babbidge said at the time that he did not expect a takeover offer in the short term future.

As we all know, additional parties have since indicated their wish to be involved in the takeover consortium, and this could be complicating the issue. Who would be included? What would be their respective stakes in the takeover vehicle? Where would the real decision-making power lie? Would they go for a full takeover (it might be hard to get 90% acceptance) or just a majority of the a2MC shares, probably much easier? What would they offer? What would be the purpose(s) of the takeover? Would the new owners simply acquire control of a2MC's IP and prevent anyone else using it, or would they continue implementing a2MC's global strategy? Would they run a2MC as a separate company or incorporate it into their takeover vehicle?

It seems that the vehicle would be Australian Fresh Milk Holdings (AFMH), which has been jointly set up by Freedom Foods, the Perich family (Leppington Pastoral) and Chinese food giant New Hope).

Freedom yesterday advised the ASX that AFMH has completed the purchase of Australia's largest single-location dairy farm, Moxey Farms, which happens to be a substantial supplier of A2 milk to a2MC. This is seen as an important preparatory step towards a potential takeover of a2MC.

The acquisition notice said: "Australian Fresh Milk Holdings Pty Ltd, a producer and seller of fresh milk for milk processors, has acquired Moxey Farms Dairy Pty Ltd., an owner and operator of dairy farms, for consideration of AUD80 million (USD59.47 million). Both companies involved in the transaction are based in Australia. Australian Fresh Milk is the joint venture company between Freedom Foods Group, Leppington Pastoral Company and New Hope Dairy. Under the terms of the Acquisition, the Moxey family would continue to operate Moxey Farms in a joint venture with the Perich family under a new Farm Management Agreement with AFMH. Upon completion, Freedom Foods will hold a 10% equity position in AFMH, with the balance held by Leppington Pastoral, Moxey Family and New Hope Dairy."

That would suggest that New Hope will be the big power in AFMH. And we know another big Chinese corporate, the online marketer JD, is also interested in a "strategic" stake in a2MC, but probably a smallish one. But where does all this leave Dean Foods, the biggest dairy operator in the US and one of the original parties to the "expression of interest" in a2MC? Would it be happy being a junior partner in a Chinese-run global dairy venture? Interesting.

silverblizzard888

17-07-2015, 06:57 PM

The takeover code of conduct does not have a presence here because it was not a formal takeover, just an expression of interest. A formal takeover is one with specific terms i.e price offered for each share, so there is no 14 day takeover or 30 day limit, this is not a formal takeover, its just a chance to look at the books and for A2 to tell future shareholders they should think clearly before owning any shares given a takeover might happen. The reason there is a 14 day no takeover is so that existing shareholders can seek advice and sell their shares if they don't want to be part of it and 30 day limit so that it doesn't affect the company and its shareholders for too long. There also has to be a takeover notice under the NZX rules.

QFD Sage

18-07-2015, 12:24 PM

Nasi Goreng

18-07-2015, 12:33 PM

I would sell at $1 and I would consider re-investing some of that back into company who buys A2.

sb9

18-07-2015, 02:12 PM

Does anyone here know the exact date of FY results announcement, I know its August, but don't know exact date.
Ok, will answer my question. It was 28 Aug last year, so I guess it'll be about that time in my opinion. Hopefully by that time we'll have a fair idea as to what's happening with recent proposal.

Harrie

18-07-2015, 06:08 PM

Anyone noticed that the 5pm boys are back in town and buying rather than selling. looks like a good sign that the patient are buying off the impatient plus the traders squaring off their books at the end of the day to me.
The expression of interest seems to be dragging on a bit, not sure if that is a good sign or not. More likely that the major shareholders want a higher price than the FF/Deans consortium may have anticipated, so trying to lower their expectations. If an offer comes I'm suspecting $1.05 FWIW.

NT001

18-07-2015, 06:37 PM

My assumption is that the consortia are still working with the board. If they were miles apart in terms of expectations then the ATM board would have finished the discussions and got on with the capital raise which was previously acknowledged as being imminent. Given that the consortia is doing DD, they do not need to wait for the full year results are announced, so my expectation is that a bid will be forthcoming, and before mid-August. As to quantum, my best guess would be an offer of $1, but I am hoping for something higher...at this stage I would not be a seller at $1. What about you others?

I don't think due diligence would be holding up the offer, but as mentioned in post 4314, I think the consortium has some other complicated issues to sort out, including who is actually going to be in the takeover group and what the group intends to do with a2MC.

As for what I would accept, it isn't just a matter of how much, although I appreciate that many shareholders will make a decision based purely on that. I've had A2 shares since its early years and would take other issues into consideration as well. My preference would be that a2MC not be just another smart NZ company that gets swallowed up by foreign interests. So, my decision will depend on a number of factors including the structure of the bid, who is behind it and what the consortium announces by way of a strategic plan for the future. And will a2MC continue to exist as an entity, with minority shareholders?

Getting 90% acceptance might force the group to go higher than it wants to. There's a range of possibilities. It could offer a mix of cash and shares in AFMH. If the offer is low, there could conceivably be counter-offers. Where does Dean Foods fit into the picture - that's still a mystery at present.

I'm glad there are plenty of contributors to this thread who say they would hold out for well over $1, but I doubt if such preliminary positions can give very useful guidance at this early stage. Better to wait until we know what the terms of offer are, IMO.

airedale

18-07-2015, 08:16 PM

Has Mac been de-listed.He is not in list of members. He was always ready with a top of the range assessment to stoke our pipe dreams.:)

winner69

18-07-2015, 08:21 PM

Has Mac been de-listed.He is not in list of members. He was always ready with a top of the range assessment to stoke our pipe dreams.:)

A few regulars seem to have gone AWOL lately ....some were quite busy on this thread

see weed

18-07-2015, 10:18 PM

Why do all these big companies want to buy little old a2 very tasty milk? Why are we even thinking of selling something that tastes so good? What can they see in the future that we cannot see? If the a2 was worth $1 per share ($660,066,000) then their first offer would probably be 80c looking for a bargain. They can see the potential and want to whip it up before it takes off into the stratosphere. I would not mind selling 10% of my shares, but I would like to go for the ride and one day get the dividends.

see weed

18-07-2015, 10:23 PM

Sideshow Bob

18-07-2015, 11:12 PM

Has Mac been de-listed.He is not in list of members. He was always ready with a top of the range assessment to stoke our pipe dreams.:)

a few days the page count was around 302 and now back to 289. So someone is goneburger.....

QFD Sage

19-07-2015, 06:22 AM

How do you get delisted? What did Mac do? I enjoyed reading his posts.

sb9

19-07-2015, 09:30 PM

Ok, all set for another week then, interesting to see if anything surfaces this coming week.

couta1

19-07-2015, 10:00 PM

How do you get delisted? What did Mac do? I enjoyed reading his posts.
Mac didn't get delisted he had had enough of what he believed was an excessive amount of trolling over on the Peb thread, when you leave your posts go with it and your name comes off the community list.

blackcap

20-07-2015, 09:18 AM

Two announcements this morning. one saying revenue up by heaps another saying the EOI from the other party not good enough. What does the shareprice do on that news today one wonders. Great to see the company doing so well and I think its good that the directors are saying NO to the EOI.

winner69

20-07-2015, 09:29 AM

Fantastic performance, never have they been so excited eh

a2m still in play methinks .....but they doing a good job in pushing the price up eh

Joshuatree

20-07-2015, 09:37 AM

Great performance and makes me want to throw heaps of money at any cap raise;but i don't really atm.:mellow:

yes indeedy
" The Board has also received other confidential enquiries indicating potential interest in the Company, and is in the course of evaluating these."

Kirk

20-07-2015, 09:50 AM

Does the forecast performance mean that cap raising may not occur?

trader_jackson

20-07-2015, 10:00 AM

Share price shows signs of moving no where... hype (and better results) already built into the price...

trader_jackson

20-07-2015, 10:00 AM

Share price shows signs of moving no where... hype (and better results) already built into the price at this stage...

(actually moved down!)

Minerbarejet

20-07-2015, 10:07 AM

Of more significance perhaps was the removal of 300,000 resistance at .77.

Joshuatree

20-07-2015, 10:11 AM

Does the forecast performance mean that cap raising may not occur?

Very much doubt it kirk and the mkt knows it .

bull....

20-07-2015, 10:13 AM

the company has rejected there takeover attempt as inadequate so unless they substantially adjust the price no takeover will occur and a rights issue will happen.

they could bring in another cornerstone party as a shareholder thru a rights issue

NT001

20-07-2015, 10:21 AM

Terrific result, and delighted the EOI is being rejected. Would like to see a2MC continue on its present course.

To me, one of the most significant parts of the update was that "New long term milk supply contracts with key milk suppliers in ANZ have been negotiated to support growing demand moving forward."

That would appear to mean there is no great threat of Perich and Moxey trying to put pressure on a2MC by withholding supply, as some of us had feared.

It's also very pleasing to learn human clinical trials of A2 Milk have been done in China and the results are to be published soon. That should give a significant boost not only to immediate sales inChina but also to the overall scientific rationale for A2.

vin

20-07-2015, 10:39 AM

Significant drop after that announcement

sb9

20-07-2015, 10:44 AM

I go with NT001 on this one. Great that the board has rejected the offer, which only suggests that they've huge confidence in future potential for this brand. Happy to support them if they need more capital from current shareholders. The price drop today I believe is caused by short tem traders. I'm more than happy to ride this one till end. GO A2 MILK!!!

iceman

20-07-2015, 10:45 AM

Significant drop after that announcement

The TO speculators selling out again and see weed buying :-)

Harrie

20-07-2015, 11:10 AM

That would appear to mean there is no great threat of Perich and Moxey trying to put pressure on a2MC by withholding supply, as some of us had feared.

Yes one of my fears nicely removed NT.
All looking good. The EBITDA increase of 200% has probably got a lot to do with the exchange rate, however more important to me is the revenue growth and success in international markets.
While encouraging, especially in California, there is still a question mark over penetration into the UK market. It will take some time but the positive progress is likely to bring about more interest from other offeror companies.
Would not expect to see SP move much below 0.69 until something else is reported.

stoploss

20-07-2015, 12:31 PM

Significant drop after that announcement

This story is not over yet ......

NT001

20-07-2015, 12:36 PM

The science behind A2 is starting to get a good airing in the US. This item in a respected US newspaper is one of the best I've seen at educating consumers.

http://www.seattletimes.com/life/wellness/sensitive-to-dairy-a2-milk-may-help/

There's just one unfortunate error that slightly detracts from the article. It says Guernsey herds have low A2 levels. Actually they have very high levels.

It's also interesting that this farm is not having its cows tested for A1-A2, presumably to save the quite small cost of testing. There is quite a degree of resistance by some independent farmers in the US to having to pay to have their cows tested, but that cost saving is counter-productive. It will prolong the conversion process, which can't be done by guesswork, even if they do select semen from A2 bulls. Quite apart from infringing a2MC's IP if they sell their milk as A2, they can't assure customers their milk is A2 until every cow in the herd has been verified by testing.

winner69

20-07-2015, 12:37 PM

This story is not over yet ......

Correct stoploss

a2m is still play

See media seems to have picked on flat profits in their headings

NZSilver

20-07-2015, 12:56 PM

stoploss

20-07-2015, 01:04 PM

Brilliant lunchtime reading.

1. Trading update looking great, revenue growth means company is growing.

2. If you read between the lines board has basically said they need a higher price to t/o - looking after its shareholders.

3. FF/Dean's still interested + other party(s) have expressed interest.

Yes no way of knowing if they offered 90 cents say and the board said no ..... Some big parcels just going through here and in Aussie , indicates someone still wants them :)

Kirk

20-07-2015, 02:03 PM

The best things that update on T/O did was affirm the market speculation about other interested parties. Based on the growth increase couldnt be happier for cap raising to take place because as an existing shareholder the current result confirm that the board know what they are doing and how to apply the growth strategy successfully in other Countries. The cap raising will speed growth up and i feel benefit us existing shareholders even more

NT001

20-07-2015, 02:10 PM

..... Some big parcels just going through here and in Aussie , indicates someone still wants them :)

Actually it seems to me trading has been fairly subdued considering two quite big announcements this morning, and the interesting point is that the SP has quickly recovered most of its initial fall on both markets. It's not surprising there is demand out there, as we're now into phase 2 in which the known parties are engaged in further detailed "discussion" about a possible T/O and other parties are also expressing interest. There will be some jockeying for position going on with various runners eyeing up their rivals, like on the second lap of a 1500 metres. Various parties to a potential takeover, as well as speculators, may be wanting to establish a stake or increase their existing stakes.

If Dean Foods are still in the equation, which they seem to be, it might be logical for them to be accumulating a strategic stake so that they have a demonstrated interest in the company rather than just being an appendage to Freedom Foods in a complex and airy-fairy scenario dreamt up in Sydney. I'd rather like Dean to come in as a cornerstone shareholder through a share placement as suggested by Bull (post 4337), obviating the need for a capital raise to fund the US expansion.

sb9

20-07-2015, 02:29 PM

Just throwing out there in light A2 board mention of other interested parties. Could Gina Reinhart throw her money after this, seeing the returns from mining are pretty much getting thinner and thinner, just a thought?

Nasi Goreng

20-07-2015, 03:13 PM

Harrie

20-07-2015, 03:31 PM

Pleasing to see that the FY16 revenue increase forecasted for the USA and UK represents around 14% of total forecasted revenue.
a2mc seems to project reasonably conservative numbers, so my expectation is that some positive traction is already happening. If they are forecasting $38 mio then it would not surprise me if double that is achieved.

Harrie

20-07-2015, 03:35 PM

Its quite fascinating looking at the sales today. Sort of tells me there is an equal amount of sellers and buyers. I would be very surprised to see the SP pop up above 78c but not so surprised if the SP falls to 70c.

At this point I'm going to stick my head out and say that until any further news either way is forthcoming, the range will be 0.69 to 0.78 but mostly around the 72 to 75 mark

NT001

20-07-2015, 04:37 PM

Here's a very informative new story from The Australian, which has recently been well ahead of other media in getting good info from a2MC CEO Geoff Babidge and from the Perich-Freedom group.

http://www.theaustralian.com.au/business/companies/a2-milk-rejects-takeover-offer/story-fn91v9q3-1227448659508

In it, Babidge confirms the cap raise is on hold, and makes some interesting comments about his hope that the good results reported today - which were due to come out about now anyway, regardless of the EIO, will satisfy Perich and Freedom, who had earlier indicated concerns about the company's performance.

This item was not paywalled when I picked it up, but The Australian sometimes sticks stories behind its paywall later, in which case i'll flick the text through on this thread.

Leftfield

20-07-2015, 07:38 PM

Thanks NToo1 but story now behind paywall. Me v happy with today's announcements. I don't want this company to disappear. Much nicer if Deans become part of the capital raise. If the SP drifts back to low 60c I'll be buying up heaps, however I think it will hold firm at current levels until further moves/announcements are made.

NT001

20-07-2015, 07:57 PM

Thanks NT001 but story now behind paywall.

Drat - sorry, but somehow I failed to save a copy when reading it. Maybe someone else on this thread who has paid access can help, at least with summary of main points.

loon

21-07-2015, 09:58 AM

Article in Stuff this morning. http://www.stuff.co.nz/life-style/well-good/teach-me/70392608/what-does-a2-milk-have-to-offer

NT001

21-07-2015, 12:25 PM

Trading on the ASX has opened at 69 cents, up from yesterday's close of 66.5c.

sb9

21-07-2015, 03:12 PM

Strong activity today on both ASX and NZX. Wonder who's buying...could be that FF and Deans buying to go over 20% and then make takeover offer in open market, seeing that board has rejected their earlier offer??

NZSilver

21-07-2015, 05:36 PM

well up to 70+ c on the ASX in late trade. 1.5 million off market traded (SP) at lkate stage NZ. Closed 78c NZX. ATM share price is going in the right direction for current investors. Surprised no SSH notices haven't come through with the amount that has been bought in sold in the last few weeks. Time will tell.

QFD Sage

21-07-2015, 05:57 PM

Finishing very strongly in Aussie, with significant volumes too. Feels like someone is building a position to me. Agree with previous post, will await SSH notices with interest.

blobbles

21-07-2015, 05:59 PM

267m next year! Will probably be 300m the way they are going!

41m from A2 platinum alone! Too early to say "I told you so" re Chinese market loving A2?

NT001

21-07-2015, 07:30 PM

Except that sweet FA is going to China - only $3m of revenue from Asia, and that includes fresh milk sales. The bulk of the formula sales was in ANZ. Still good though, and probably more profitable to sell in ANZ than Asia anyway going by the EBITDA losses in Asia.

Agree, KW. Of course, the holdup in Chinese approval for Synlait held up ATM for quite a while and with that now fixed, things should be picking up. And the relationship with the JD sales site should help a lot. Plus, a2MC has some results from a human trial in China ready for release soon. That will hopefully give A2 some real impetus because as I understand it, digestive problems with dairy are more of a problem with Chinese than with European consumers. Trial results involving Chinese consumers in China should give A2 the edge, starting with fresh milk, and logically this should also boost confidence in A2 formula.

But the Chinese market will always have its difficulties, both logistical and cultural, and my bet is that the US will quickly overtake it.

NT001

21-07-2015, 08:07 PM

Here's an update in The Australian of yesterday's story that disappeared behind a paywall. I've cut it back somewhat, but here are the main points in case they likewise get paywalled. It's got some good new info.

Dairy company a2 Milk and its major shareholder the Perich family-backed Freedom Foods have reached a stalemate over a takeover approach by Freedom and its partner Dean Foods, with the predators believed to be underwhelmed by a trading update issued by the milk company.
Yesterday a2 formally rejected the approach by Freedom and the US-listed Dean Foods and said it was exploring other potential approaches it had received since the Freedom offer was made public last month.
Geoffrey Babidge, a2’s managing director, also confirmed the group had put a potential capital raising on hold as it revealed earnings before interest, tax, depreciation and amortisation was forecast to triple to $NZ12 million ($10.6m) in 2016, slightly above consensus forecasts.
Revenue is tipped to rise from $NZ154m in 2015 to $NZ267m in 2016, above most forecasts.
It is believed the Perich family and Freedom are concerned about a2’s ability to finance and execute its expensive international expansion plans, especially in the US, without the support of a deep-pocketed partner.
But Mr Babidge said the group’s infant formula sales in Australia, New Zealand and China had been better than expected, as were sales from new product launches including whole milk powder, launched in June.
“At certain times I sit down with key shareholders and talk about their views about growth and shareholders have perspectives on what we are doing. I take those on board. That is welcome,’’ Mr Babidge said.
“These results are now starting to demonstrate the strength of the business and the strength of the business model going forward.
“Infant formula looks like a bigger opportunity. It has taken time for returns to come through and that creates frustrations. (But) that is starting to produce substantial returns.’’
While Freedom declined to comment on the market update, it is believed it sees no reason to increase the terms of its indicative offer made last month, the details of which have remained confidential.
However, a 30 per cent premium to a2’s trading price prior to the offer being made last month would translate to an offer price between 65c and 70c. a2 shares closed 0.8 per cent higher at 67c yesterday.
One analyst, who declined to be named, said the update was better than expected and that the US expansion strategy was generating better sales than had been anticipated.
There have been no discussions on the terms of the offer between the principals of a2 and Freedom and Dean Foods over the past month. Instead, the discussions between advisers have centred on the terms of the confidentiality agreement between the two groups.
Mr Babidge said a planned capital raising to fund the group’s international expansion had been put on hold. “We have acceded to that (request) as part of the expression of interest process ... (But) we have sufficient funding capability for the current business plan,’’ Mr Babidge said.

iceman

21-07-2015, 09:16 PM

Except that sweet FA is going to China - only $3m of revenue from Asia, and that includes fresh milk sales. The bulk of the formula sales was in ANZ. Still good though, and probably more profitable to sell in ANZ than Asia anyway going by the EBITDA losses in Asia.

It would be interesting to know how much of the Australian sales of formula are being sent to China. Some info is suggesting that may be quite significant via internet sales.
Thanks for posting the Australian article NT001. Interesting reading.

Definitely interesting times ahead for ATM and I would be very pleased if we get no takeover at this stage

sb9

21-07-2015, 10:18 PM

It's quite fascinating how this is unfolding atm. Closed at 72.5c on Asx, which is roughly 81c nz. Will be interesting to see how far this goes tmrw...

baller18

22-07-2015, 09:10 AM

Off market trade of nearly 1.5 million at 78 cents...
Funny what happened yesterday should've happened the day the trading update was released, guess it's the takeover speculators bailing out..
Think people have had a day or two to digest the results now

baller18

22-07-2015, 09:21 AM

who is doing all the buying... another 1 million just went through...

Jasemc

22-07-2015, 10:10 AM

who is doing all the buying... another 1 million just went through...
Here comes the charge ?

zymwh

22-07-2015, 10:12 AM

a2 Milk’s rejection of takeover bid buoys analysts by: Damon Kitney

The Australian
July 22, 2015 12:00AM

......

sb9

22-07-2015, 10:16 AM

Thanks for the link zymwh.

Going to be next Coke story I believe....all holders sit tight and enjoy the ride...

silverblizzard888

22-07-2015, 10:29 AM

Touching 82 cents this morning I like what I see!

Harrie

22-07-2015, 10:46 AM

a2 Milk’s rejection of takeover bid buoys analysts by: Damon Kitney

The Australian
July 22, 2015 12:00AM

Analysts have expressed optimism about the US expansion strategy of dairy company a2 Milk and believe it will inevitably be the target of a bidder with an established supply chain in international markets.

........

“We now think (a2 Milk) is not the highest-value owner of its own business. The potential margin upside gained from operating leverage through a higher processing utilisation rate and pre-established supply-chain logistics of larger operators, be it Dean Foods and WhiteWave or other players, could be very significant,’’ New Zealand-based Credit Suisse analyst Kar Yue Yeo told clients.

A2’s revised earnings guidance included a $NZ38m revenue projection for its British and US businesses next year against the broker’s $NZ11m estimate. A2 shares rose 9 per cent yesterday to close at 72.5c.

“A2 appears to be already making significant inroads in establishing channel presence with US national and regional specialty food grocers,’’ the broker wrote.

“Clearly, a2 has much higher expectations for market penetration and revenue growth in its UK and US operations than our current assumption, based on the company’s planned channel rollout. In a sense, this is a positive outcome if the company is able to deliver on this result, despite a higher cash burn rate in the short term.’’

........

UBS analyst Jordan Rogers was impressed by a2’s infant formula sales and tipped market share of 14 per cent.

Thanks for that Zymwh, pretty well much confirms my 4342 and 4352 posts

NT001

22-07-2015, 11:57 AM

who is doing all the buying?...

Even more interesting would be who is doing the selling. Although trading has been reasonably active since the EIO was rejected, it hasn't really involved any significant chunks of a2MC's total capital. Transactions involving 1m shares here and there don't really amount to much, and could even be cosmetic trades between friendly parties.

To me this suggests (rightly or wrongly) that none of the major stakeholders are selling yet, and FF-Dean are going to have to raise their behind-the-scenes offers.

Yesterday's story in The Australian (post 4365), written by a reporter who has been following this affair very closely and obviously has good contacts with the parties involved, appeared to suggest that FF-Dean were hoping to get takeover traction with offers in the region of 65-70 cents, based on that being a 30% premium over the price a month or so back. That's probably not going to attract many sellers. But it will certainly fuel speculation about who was behind the market manipulation to drive the price down below NZ50c over recent months.

Positive comment from media and market analysts based on a2MC's latest update should help drive the price up, as we've seen this week. At some point - probably when it gets towards NZ90c - we may see some of the big holders starting to sell reasonable chunks as a safeguard against the takeover proposal falling apart and the SP returning again to around the NZ70s-80s. I'm no TA guru but I would suggest it won't fall back much lower than that because there will be ongoing hopes of a new takeover offer and increased interest in the company, based on recent publicity and growing confidence in the company's forward strategy. The Australian is now saying (paywalled) that "analysts have expressed optimism about the US expansion strategy of dairy company a2 Milk and believe it will inevitably be the target of a bidder".

sb9

22-07-2015, 01:07 PM

Looks like its one direction at the moment....strong momentum.

Harrie

22-07-2015, 02:30 PM

Maybe the "golden Cross" has some validity afterall?

stoploss

22-07-2015, 02:44 PM

Trimmed the position a little bit today , just some extras I picked up low 70's . Will give me the ability to ride the balance comfortably , or if we see a blip back down for whatever reason , the ability to buy more .

Joshuatree

22-07-2015, 04:10 PM

I sold a third today;a buyer hiding at 82c took them out instantly.

Kirk

22-07-2015, 04:16 PM

Macs valuation would look interesting now with great 2016 revenue

NT001

22-07-2015, 07:17 PM

Just over 1% of total ATM shares changed hands on the NZX and ASX today.

An updated list of ATM shareholders (dated 17 July, just before the EIO was rejected), shows little selling by the top 20 shareholders and custodial trusts since 3 July.

A quick glance indicates there may have been some change in the status of David Mair’s stake of 5m shares (about 0.8%) but it’s not clear whether they have been sold or perhaps transferred to the ASX register. If he's sold them he would need to file a SSH report pretty soon.

Shares held custodially by NZ Securities Depository Ltd (Reserve Bank) for major clients including Milford, NZ Super and ACC have gone down by 9.7m net (1.5% of ATM’s total capital), hardly a big movement considering the Depository still has 34.9% of ATM in its custody.

see weed

22-07-2015, 08:18 PM

Approximately 138,000,000 have traded since the take off 2/6/15.

Harrie

23-07-2015, 09:51 AM

Shares held custodially by NZ Securities Depository Ltd (Reserve Bank) for major clients including Milford, NZ Super and ACC have gone down by 9.7m net (1.5% of ATM’s total capital), hardly a big movement considering the Depository still has 34.9% of ATM in its custody.

Quite a lot of that would have to be Milford wouldn't it?. Does anyone have a breakdown of the entities operating under the NZSDL custodian and the % held by each? Even under this custodial relationship I'm pretty sure that each entity is required to issue a SSH if they individually own >5% as they have in the past. In the absence of such notice I suppose we have to assume that NZSF and ACC are maintaining their exposure.

Having a coffee with MAC later today. Let me know if there are any questions you have for him. Think he is a bit disillusioned with the calibre of analysis on this and other sites.
I see that the mean analyst predictions are around $0.94 up from around $0.77 based on the latest forecast.
Expect to see some profit taking today

Joshuatree

23-07-2015, 10:06 AM

It was sad that MAC couldn't reconcile the differences between his excellent research he shared; mixed in with ramping any stock he was in, CRP being classic example..
I took third off yest ina conservative measure for me for my margin of safety. See what comes next.

NT001

23-07-2015, 10:55 AM

I should have made clear in post 4381 that the shareholders list I obtained was only of those on the NZX register and does not include transactions in Australia, where trading has been quite brisk. I have no way of knowing who is buying and selling over there. Wouldn't surprise me if some party friendly to FF-Perich was accumulating shares there.

NT001

23-07-2015, 11:20 AM

Couple of items that may be of interest to those who follow developments in the global dairy industry, more for the FA buffs.

The well regarded European trade journal Agrimoney reports a European dairy takeover and mentions Fonterra's new Clandeboye plant which will turn out mozzarella, making the point that global dairy giants are moving into value-added milk products as the commodity side declines.

http://www.agrimoney.com/news/frieslandcampina-buys-fabrelac-amid-sector-move-upmarket--8598.html

It also says the Canadian milk giant Saputo, which last year bought Australian cheese producer Warrnambool Cheese and Butter for A$450m, is reported to be on the prowl for further acquisitions in Australasia. Another potential bidder for A2?

Agrimoney speaks of China's growing domestic milk production becoming a factor in the dairy glut, but Keith Woodford in his latest blog article disputes this, saying "China currently produces more than 1 million tonnes of milk powder each year itself [but] there is absolutely no way this can be cost competitive with milk powder imported from New Zealand".

He also paints a very gloomy short term picture for dairy prices, saying they'll go down further yet, but will eventually come right and dairying is still the mainstay of NZ's economy. No mention of A2 in this.

https://keithwoodford.wordpress.com/2015/07/21/black-thursday-for-dairy-and-fonterra-but-eventually-the-sun-will-rise-again/

Joshuatree

23-07-2015, 09:52 PM

PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01643503) Ladies and Gentlemen , take your positions. Perpetual an initial sub holder over 5% ; on the ASX today.

Minerbarejet

24-07-2015, 07:35 AM

PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01643503) Ladies and Gentlemen , take your positions. Perpetual an initial sub holder over 5% ; on the ASX today.Yes, interesting they came out at 4.19 EDT AUS after ASX is in tidy up mode, could be a bit of action today. Giving the punters time to take it on board overnight. Better than ten to 10 over there and halfway through the day here.:)

NZSilver

24-07-2015, 08:49 AM

What is the significance of perpetual?

Joshuatree

24-07-2015, 08:58 AM

Another player entering the game; they see some money to be made (usually in shorter timeframes).They are a successful Insto and are there to make arbitrage;believe maybe a takeover is in play and that the s/p will rise in the possible dogfight ahead.They maybe doing it on behalf of someone else etc.

NZSilver

24-07-2015, 09:06 AM

Cheer JT, well the plot thickens. Still very unclear what is going on and how it will all pan out! So possibly perpetual would buy shares on behalf of another party ie another interested dairy company.

sb9

24-07-2015, 09:57 AM

Yeah reckon its gonna be very action packed day today...

see weed

24-07-2015, 12:59 PM

Me make big boo boo:confused:, sold 45,000 on Monday @ >74c and buy back half of them today for .82c, hoping that the new low might be around 79c to 80c. What do ya think...good move?:)

zymwh

24-07-2015, 01:03 PM

http://www.nbr.co.nz/article/analysts-optimistic-about-eventual-a2-milk-takeover-offer-jr-p-176059

Analysts optimistic about an eventual A2 Milk takeover offer

Jenny Ruth Friday July 24, 2015

Analysts are optimistic it’s just a matter of time before an acceptable takeover bid for A2 Milk [NZX: ATM] emerges.

That’s possibly why its share price weakness was so short-lived after A2 said the bid from known suitor, major shareholder Freedom Foods and US-based Dean Foods, wasn’t acceptable but the parties are still talking and it has received other approaches.

Three analysts covering the stock have target prices of $1 and more, compared with yesterday’s market closing price at 80c, and all have buy or out-perform recommendations.

Forsyth Barr analyst James Bascand, the most conservative with a target price bang on $1, gives a successful bid a 50% chance.

“We believe A2 is more valuable under ownership that can provide distribution across global markets and access to processing assets than in its current form,” Mr Bascand says.

His discounted cashflow valuation absent a takeover is 82c but $1.18 with a bid.

UBS analyst Jordan Rogers says while he doesn’t know what level the Freedom/Dean bid and other expressions of interest are pitched at, “we believe that any takeover offer for A2 would likely have to be in the low $1.00s or higher to have a chance.”

Mr Jordan’s current target price is $1.05, up 10 cents on the back of A2’s latest guidance, although his discounted cashflow valuation is $1.21.

First NZ Capital analyst Kar Yue Yeo says the company is worth more to larger operators than it is on its own.

“The potential margin upside gained from operating leverage through a higher processing utilisation rate and pre-established supply-chain logistics of larger operators …. could be very significant,” Mr Yeo says.

He’s the most optimistic with a $1.17 target price and his valuation ranges from just 88c through to $2.24, depending largely on how A2’s rollout in the US pans out.

Highest-value owner

The top end of his valuation is what he thinks the stock might be worth to “a highest-value owner,” not what a bidder might offer.

“We think the current risk-reward in A2 remains compelling,” Mr Yeo says. He also rates the chance of a successful takeover at about 50%.

Freedom Foods, which owns 19.1% of A2, is well-known to New Zealand investors as A2’s previous joint-venture partner in Australia, its most successful market to date and where it commands a 9.3% share of the grocery market for fresh milk.

Mr Yeo has had a close look at Dean Foods. Focused solely on standard dairy milk, it claims about 40% of the US fluid milk market, has more than 50 regional and national brands and is the only producer with a national footprint.

With about 17,000 staff and 70 plants across the US, it delivers to more than 150,000 locations daily.

But since it hived off a number of businesses, including the spin-off of consumer foods company WhiteWave Foods over 2012/13, Dean’s market is in structural decline as its customers age and buy less standard milk.

It’s losing market share to both “organic” and non-dairy specialty milks.

Mr Yeo says organics account for about 10% of the dairy milk market and other specialty milks for a similar level.

He notes A2’s joint-venture partner in the UK, Robert Wiseman, is a Dean director, suggesting he may have been the catalyst for the US company’s interest in A2.

WhiteWave Foods is another potential suitor, Mr Yeo says. Dairy products accounted for about 20% of WhiteWave’s revenue in calendar 2014 and its Horizon Organic brand is the leading organic brand in the US.

Hain Celestial Group, which markets natural and organic food and personal care products in the US, the UK and continental Europe, is another potential suitor.

Hain’s exposure to the dairy market currently is solely through its Greek Goods Yoghurt brand.

Harrie

24-07-2015, 01:21 PM

Thanks Zymwh, for sharing that.
Its all looking very positive, but someone could be talking up their own book here. Nevertheless its all good news at the moment and analysts lower range valuations over $1.00 set a pretty impressive target.

Kees

24-07-2015, 01:25 PM

Me make big boo boo:confused:, sold 45,000 on Monday @ >74c and buy back half of them today for .82c, hoping that the new low might be around 79c to 80c. What do ya think...good move?:)

I sold at 74 as well happy with the profit but you can bet if I buy back in the price will collapse so will leave it alone and watch the action on the side line.

Harrie

24-07-2015, 01:25 PM

That's the problem with trying to be a trader see weed, if you are 51% right all the time, then you are a genius.
Buy the story, and hold for the long term and save yourself a heap of brokerage. At the mo a move below 0.80 now seems a bit remote, but I'm not a trader so anything is possible!

sb9

24-07-2015, 02:26 PM

I'm with Harrie here, gotta be careful if you're a trader in this scenario as the story changes with bit of news. I'm sticking with my original parcel bought at 58c and happy to play till the end. All I can say is based on recent trading update, the potential for this one is huge and would like to be part of it.

Ginger_steps_

24-07-2015, 03:05 PM

"He’s the most optimistic with a $1.17 target price and his valuation ranges from just 88c through to $2.24, depending largely on how A2’s rollout in the US pans out."

Dear a2,

Please tell the bidders to get lost for 18 months, and continue your great work in the US - In 18 months time I will gladly accept $2.24 for my shares.

Sincerely,
Ginger

Ginger_steps_

24-07-2015, 04:40 PM

see weed

24-07-2015, 04:49 PM

I sold at 74 as well happy with the profit but you can bet if I buy back in the price will collapse so will leave it alone and watch the action on the side line.
Sold my air shares a couple of years ago for a $1 after buying in at mid 80s and 90s. Big boo boo then, so bought them back again at $1.04 the next day seeing which way they were heading:eek2:. Feel like have done the same with a2.

NT001

24-07-2015, 05:28 PM

How about we leave it alone so that it can become an industry giant in its own right, rather than selling it to an industry giant. Why does NZ want to sell one of the few agricultural value-add companies we have, when we are in a world where dairy is a basic commodity being sold for lower and lower prices. We keep talking about the need to add value to our commodities, but when we do, someone comes along and takes off with the business as soon as it looks like there might be some real money in it.

At this point, I hope Fonterra makes an offer. At least we keep it in the country, so that future New Zealanders get to benefit from it.

I couldn't agree more with your first paragraph, KW. And although I realise that big NZ holders of ATM shares such as Milford, NZ Super Fund and ACC are supposed to be unsentimental in the pursuit of profits, I suspect that after reading the company's recent update and the increasing confidence shown by analysts, they will be reluctant to incur egg on face by selling out an excellent innovative NZ company to foreign sharks if it puts them at risk of later watching a good NZ company slip from their hands.

As regards your concluding paragraph, I don't agree, for reasons previously stated. The only reason Fonterra would want to buy a2MC is to acquire control of its IP and quietly back-pedal its strategic plans. After all, a2MC's strategy is based on the fact that ordinary milk, as sold to the world by Fonterra, is bad for you. How on earth would Fonterra go about promoting and developing such a company? Although it initially endorsed the scientific rationale for A2 milk, Fonterra some years ago realised this stance was going to become problematic, and has since pooh-poohed it and given its farmers no encouragement whatever to convert their herds to A2.

Anyway, Fonterra has no cash to spare at the moment. You can imagine what its farmers would say if it blew a couple of hundred million on investing right now in a company it has rubbished for years. Also, it has to be realised that Fonterra is viewed globally with a good deal of suspicion because of its market dominance. Better for a2MC to stay out of its clutches, and better still to be seen as no friend of Fonterra. IMO

sb9

24-07-2015, 05:40 PM

Very well summed up NT001 and as for Fonterra, no thanks pls with all due respect. Leave A2M alone!!!

Fisherking

24-07-2015, 07:17 PM

Very well summed up NT001 and as for Fonterra, no thanks pls with all due respect. Leave A2M alone!!!

Agree, not at all keen on the direction FSF are taking; also looks like they've paid far too much for their stake in beingmate, even if it is strategic.

skid

24-07-2015, 09:35 PM

So with that in mind perhaps the best outcome would be no takeover(for NZ that is)

NT001

24-07-2015, 10:01 PM

A useful update on the takeover situation from BusinessDesk per NBR

http://www.nbr.co.nz/article/australian-consortium-said-be-no-hurry-its-bid-a2-milk-b-176115

see weed

24-07-2015, 11:46 PM

A useful update on the takeover situation from BusinessDesk per NBR

http://www.nbr.co.nz/article/australian-consortium-said-be-no-hurry-its-bid-a2-milk-b-176115
Thanks NT001, good reading.

BobbyMorocco

25-07-2015, 09:16 AM

Yes, it is good reading. Same article NT001 linked to above. I thought it's just as easy to post the whole thing here for everyone to read, because no doubt in a couple of days it will be behind a paywall. Enjoy! :-)

FIONA ROTHERHAM FRIDAY JULY 24, 2015

Australian-based Freedom Foods and US-based Dean Foods are said to be in no hurry to up their bid for A2 Milk Co [NZX:*ATM] after the milk marketer this week told its suitors to try again after an initial offer wasn't compelling and drew out as yet unnamed rival bidders.

A source close to the bidding consortium said they were underwhelmed by a trading update A2 Milk released at the same time as rejecting the offer and request for due diligence, saying it contained "nothing that would shift their view on valuation".

Given Freedom Foods, the company's previous joint venture partner in Australia, has a 19.1% blocking stake in A2 Milk, any rival bidders may struggle to get an offer across the line.

But the market's view seems to be that it's just a matter of time before an acceptable takeover bid is nutted out and A2 Milk's share price on the NZX has rebounded to 81c from 57c before the offer was announced. Analysts covering the stock have target prices of $1 and more and most have 'buy' or 'out-perform' recommendations. The level of the consortium's bid has not been revealed.

A2 Milk chief executive Geoff Babidge, who used to work for Freedom Foods, said he couldn't make any further comment on where the offer talks were at, except to say they were continuing.

The company, which has had patchy media coverage since its inception in 2003, is keen though to spread the word about its future prospects and global expansion plans into the UK, the US and China.

The board had previously indicated it would need to raise capital for that expansion but that has since been shelved following the Freedom Foods/Dean Foods offer which was conditional on the capital raise not proceeding. Freedom Foods is effectively controlled by the Perich family, which is a major supplier of A2 milk to the company while Dean Foods is America's largest marketer of fresh milk.

Analysts have estimated A2 Milk could need to raise $50 million to execute its US and China growth strategy but Mr Babidge insisted today it has sufficient capital to proceed with the current strategy.

He said due to changes made in the UK market during the 2015 financial year, a reduced funding contribution is required for that business in the 2016 financial year but it could take two years to break even. The board expects $US20 million will be required over three years following this year's launch of the US business in California before its projected break even point.

Mr Babidge said A2 Milk was continuing to perform strongly, ahead of plan, with revenue projected to rise from $154 million in 2015 to $267 million in the 2016 financial year.

Infant formula, which is contract manufactured for it by Synlait Milk in New Zealand, is emerging as a significant source of revenue growth for the company. A2 Platinum infant formula achieved revenue of $41 million in Australia and China in the 2015 financial year and the company has doubled the number of South Island farmer suppliers for infant formula in the past six months, based on forecast sales growth. A2 Milk pays an average 6 percent above the standard farmgate price to its suppliers in each of its regions.

It also launched retail sales of wholemilk powder in Australia last month, which are expected to be another significant revenue earner over time and will next month launch A2-branded ice-cream into Coles supermarkets in Australia.

Babidge said the next product in the innovation pipeline was cheese made from A2 milk. It is also preparing a strategy for distributing milk in New Zealand once the one remaining distribution licence expires in 2017.

(BusinessDesk)

http://www.nbr.co.nz/article/australian-consortium-said-be-no-hurry-its-bid-a2-milk-b-176115

Bjauck

25-07-2015, 11:57 AM